ISLAMABAD: The World Bank projects growth in Pakistan to languish at 3 percent or less by 2020 in its latest Global Economic Prospects report, as macroeconomic stabilisation attempts to weigh on activity.
The report highlighted Pakistan as an exception for high inflation in the South Asian region, as opposed to the region’s mostly steady inflation rate backed by low domestic demand and relatively stable currency markets.
The World Bank said Pakistan’s growth declined to an average 3.3% in Fiscal Year 2018/19, suggesting a broad-based domestic demand slowing.
The Multilateral Development Bank said 2019 was the worst economic expansion since the global financial crisis a decade ago and 2020 was vulnerable to trade instability and geopolitical tensions, while a slight improvement existed.
READ MORE: Indonesia deploys fighter jets in disputed waters with China
The World Bank cut 0.2 percentage point off inflation for both years in its Global Economic Prospects report released on Wednesday, with global economic growth projected at 2.4 percent in 2019 and 2.5 percent in 2020.
The updated World Bank projections take into account the US and China signed Phase One trade deal, which postponed higher US tariffs on Chinese consumer goods scheduled for Dec. 15 and decreased the duty rate on some other goods.
While the cut in tax rates will have a “smaller” impact on exports, it is estimated that the agreement would improve business confidence and investment opportunities, leading to a pick-up in export growth.
World Bank report said, “Global trade growth is expected to rise modestly in 2020 to 1.9% from 1.4% in 2019, the lowest since the financial crisis of 2008-2009.” according to figures from the World Bank, this is well below the 5 percent real annual growth rate since 2010.
READ ALSO: Pak Suzuki to shut down its production for four days in January
World Bank officials said both exports and expectations for overall economic growth remain vulnerable to flare-ups in the U.S, China trade conflicts as well as increasing geopolitical tensions, they could not predict the growth impact of a larger U.S, Iran dispute, yet said this would intensify instability, hurting investment prospects.