Washington DC, 11 January 2023 (TDI): The World Bank released a Global Economic Prospects report predicting Pakistan’s economic growth at 2.0 percent in the fiscal year 2022–2023 (FY2022/2023) with the warning that the world economy is perilously close to sliding into recession.
A sharp, long-lasting slowdown is expected to hit developing countries this year. The global economy is projected to grow by just 1.7% in 2023. #WBGEP2023
— World Bank (@WorldBank) January 10, 2023
According to the bank, Pakistan’s growth rate was half the pace predicted in June, and the country is currently experiencing difficult economic conditions. It results from the effects of the most recent flooding as well as ongoing policy and political uncertainty.
Overview of the report
The report anticipated that overall growth in South Asia will decrease to 5.5% in 2023 and then accelerate up to 5.8% in 2024.
The effects of the floods in Pakistan and the economic and political crises in Afghanistan and Sri Lanka are partially countered by the pace of growth in India, the Maldives, and Nepal, which is still solid.
According to the report, export and investment growth in India are forecasted to decrease to 6.9 percent in FY2022/23, a 0.6 percentage point downward revision since June. Despite this, the South Asian nation is still the fastest-expanding major economy in the world.
In Bangladesh, growth will decelerate to 5.2% in FY2022/23. This is due to the growing inflation and its detrimental effects on household incomes and, business input costs & import restrictions.
According to the report of the World Bank, food insecurity is growing in the South Asian region. It gets nearly one-fifth of its calories from wheat products.
The report stated, “Risks of rising deprivation and poor nutrition remain significant even though global food price inflation appears to have abated.”
The report sheds light on the recent floods in Pakistan. It noted, “Climate change is a significant threat in the region. The recent floods in Pakistan have caused damage equivalent to about 4.8 percent of GDP.”
“Extreme weather events can exacerbate food deprivation, cut the region from essential supplies, destroy infrastructure, and impede agricultural production.” The report continued.
This bleak outlook will be especially difficult for emerging markets and developing economies. Those already struggle with high debt levels, weak currencies, and low-income growth.
World Bank President David Malpass shared his views regarding this situation. He highlighted, “Weakness in growth & business investment will compound the already devastating reversals in education, health, poverty, and the increasing demands from climate change.”
In my foreword I set out critical steps that are needed to boost median incomes & shared prosperity: https://t.co/UtYBNwuFg0
— David Malpass (@DavidMalpassWBG) January 10, 2023
It is pertinent to note that the sowing business investment in developing countries is now expected to grow at a 3.5% annual rate over the next two years. It is less than half the rate seen over the previous two decades.