ADB lowers growth forecast for Pakistan to 6.5pc

The Asian Development Bank (ADB) has lowered its growth forecast for Pakistan to 6.5 per cent from the targeted 7.2 per cent for the current fiscal year.

Islamabad, Sept 18 : The Asian Development Bank (ADB) has lowered its growth forecast for Pakistan to 6.5 per cent from the targeted 7.2 per cent for the current fiscal year.

The ADB said in its Asian Development Outlook 2007 Update released on Monday that Pakistan could also miss some other economic targets.he Dawn quoted the report as saying that some key political questions along with economic constraints, including power shortages, needed to be resolved for sustainable GDP growth.

"The lack of industrial and export diversification has to be rectified, to bring down persistent growth in the current account deficits to levels consistent with sustainable financing," it said.

Terming the need for a resolution of the current political uncertainties as the "fundamental issue" it insisted the forthcoming presidential and parliamentary elections should be "seen by the population as fair, and need to ensure continuity and coherence of economic policy, to sustain economic and governance reforms".

Praising Pakistan's average growth of 7.5 per cent over the four-year period (fiscal 2003-2007), the Update said the rate could be sustained in the medium term if macroeconomic fundamentals remained strong and policy commitment to governance and economic reforms continued.

However, it added, "...despite recent improvements, the still-low investment and saving rates represent a constraint to achieving and maintaining high growth, and that has to be addressed."

It said that slow growth in Pakistan exports was projected because of continuing weakness in textiles.

The ADB went on to forecast that the fiscal deficit would be 4.2 per cent of the GDP in fiscal year 2008, "slightly above the government budget plan of 4.0 per cent".

ANI