ISLAMABAD – The Asian Development Bank (ADB) on Tuesday said the improvement in Pakistan’s estimated growth at 3.9 per cent in fiscal year (FY2021) was supported by the strong industrial growth coupled with steady remittance inflows.
Inflation in Pakistan averaged 8.8per cent in the first 11 months (July to May) of FY2021 on rising global commodity prices, especially for food and crude oil, the ADB said in its report. The supplement to ADB’s flagship economic publication, Asian Development Outlook (ADO) 2021, provides updated projections for the region’s economies and inflation levels amid the Covid-19 pandemic.
According to the report, inflation is higher in Pakistan as compared to the other countries of South Asia. The inflation forecast for South Asia in 2021 is raised from 5.5per cent to 5.8per cent, mainly reflecting a higher forecast for India, but unchanged at 5.1per cent in 2022. Indian consumer price inflation rose to 6.3per cent year on year in May as both food and fuel inflation outpaced expectations. This supplement raises the inflation forecast for India in FY2021 by 0.3 percentage points to 5.5per cent while keeping the forecast for FY2022 at 4.8per cent.
Elsewhere in the sub region, inflation in Bangladesh averaged 5.6per cent in the first 11 months of FY2021 as lackluster domestic demand slowed nonfood inflation early on, the result slightly lower than 5.8per cent forecast in ADO 2021 for the whole year. Bhutan suffered inflation at 8.2per cent in the first 9 months of FY2021 as food prices jumped. Average consumer price inflation in Maldives was 0.3per cent in the first 4 months of 2021 and is likely to fall in the rest of this year following the government’s reinstatement in May of water and electricity subsidies and its plan to cut internet service prices from July.
The Asian Development Bank (ADB) is projecting 7.2per cent economic growth for developing Asia this year, compared with its 7.3per cent forecast in April, as renewed corona virus disease (Covid-19) outbreaks slow the recovery in some economies in the region. The growth outlook for 2022 is upgraded to 5.4per cent from 5.3per cent.
East Asia’s growth outlook for 2021 is raised to 7.5 per cent, from 7.4 per cent in April, amid a stronger-than-expected recovery by the newly industrialised economies of Hong Kong, China; the Republic of Korea; and Taipei, China. The sub regional growth forecast for 2022 is retained at 5.1 per cent. The growth outlook for the People’s Republic of China is likewise maintained at 8.1 per cent this year and 5.5 per cent in 2022, amid steady performances by industry, exports, and services.
The Covid-19 pandemic remains the biggest risk to the outlook, as outbreaks continue in many economies. Daily confirmed cases in the region peaked at about 434,000 in mid-May. They narrowed to about 109,000 at the end of June, concentrated mainly in South Asia, Southeast Asia, and the Pacific. Meanwhile, the vaccine rollout in the region is gaining pace, with 41.6 doses administered per 100 people by the end of June—above the global average of 39.2, but below rates of 97.6 in the United States and 81.8 in the European Union.
Projections for South Asia, Southeast Asia, and the Pacific for 2021 are lowered as renewed outbreaks are met with containment measures and restrictions, hampering economic activity. South Asia’s growth outlook for fiscal year 2021 is lowered to 8.9per cent from 9.5per cent. The forecast for India is downgraded by 1.0 percentage point to 10.0per cent. Southeast Asia’s 2021 outlook is revised to 4.0per cent from 4.4per cent, while the projection for Pacific economies is lowered to 0.3per cent from 1.4per cent.
The inflation forecast for Asia and the Pacific this year is raised to 2.4per cent, from 2.3per cent in April, reflecting rising oil and commodity prices. The projection for 2022 remains at 2.7per cent.