Pakistan: Economy

Government policies narrow the budget deficit, rebuild depleted exchange reserves, and raise the growth modestly despite large energy deficits. The outlook is for moderate growth, lower inflation, and a stable external position underpinned by low oil prices and stronger growth in the advanced economies. These projections assume further progress in the Government of Pakistan’s extensive program of macroeconomic and structural reforms, as well as manageable political and security challenges.

Selected economic indicators (%) - Pakistan 2015 2016
GDP Growth 4.2 4.5
Inflation 5.8 5.8
Current Account Balance (share of GDP) -1.0 -1.3

Source: ADB estimates.

Economic performance

A strong revival in construction and steady expansion in manufacturing and services edged up growth in gross domestic product (GDP) to provisional 4.1% in Fiscal Year 2014 (ended 30 June 2014) from 3.7% in the previous year. Agriculture growth decelerated to 2.1% as a fall in the production of minor crops and slow growth in livestock offset rising output in most major crops.

Economic prospects

GDP growth in Pakistan is projected at 4.2% in FY2015 and 4.5% in FY2016, underpinned by low international oil prices and the expected uptick in economic growth in advanced economies. The projections assume steady progress in macroeconomic and structural reforms, manageable political and security challenges, and normal weather. Growth in FY2016 could be higher if economic reform proceeds at a faster pace. The government has made some progress in implementing macroeconomic and structural reforms to strengthen its fiscal position, alleviate energy shortages, and restructure and privatize loss-making public enterprises. However, progress remains slow in a challenging political and security environment.

Excerpted from the Asian Development Outlook 2015.