With the lowest GDP growth of 0.5% among all South Asian nations, the World Bank (WB) has warned Pakistan about external financing risks that could be compounded by difficulties in rolling-over bilateral debt from non-traditional donors and tighter international financing conditions.
The WB’s report on South Asia reveals that regional growth was expected to rebound to 4.5% in FY21 against -7.7% in the last fiscal year.
Afghanistan’s growth is now projected at 2.5%, Maldives 9.3%, Sri Lanka 3.3%, Bangladesh 1.6%, Bhutan 0.6%, Pakistan 0.5% and India 5.4% in FY21.
India’s economy had contracted by 9.6% in FY20.
The report stated that there are considerable downside risks to the outlook of Pakistan’s economy, with the most significant being a possible resurgence of the coronavirus, triggering a new wave of global and/or domestic lockdowns and further delaying the implementation of critical structural reforms.
“Locust attacks and heavy monsoon rains could lead to widespread crop damage, food insecurity and inflationary pressures, and livelihoods for households dependent primarily on agriculture could also be negatively impacted,” the WB has warned.