The State Bank of Pakistan (SBP) expects Pakistan’s GDP growth to moderate considerably during FY23, according to its flagship report on the country’s economic health.
According to the SBP’s ‘Annual Report on The State of Pakistan’s Economy’ released on Wednesday, the central bank projects real GDP growth below the previously announced range of 3–4% for FY23, after taking into account the destruction caused by floods and the policy focus on stabilisation.
The central bank said that as suggested by the tapering sales of high-frequency demand indicators, demand compression measures introduced by the government and the SBP have started to cool down the overheated economy in the initial months of FY23.
The SBP said that the economy was already in a stabilization phase, when wide scale flooding hit a large part of the country at the start of FY23.
“The flooding in FY23 is likely to impinge on the country’s real economic activity through various channels. Specifically, the losses in agriculture emerging from the damages to crops and livestock are likely to transmit to the rest of the economy through various backward and forward linkages.
“Similarly, the wide scale destruction of infrastructure in the affected provinces may also undermine the country’s growth prospects during the year,” said the report.
On the other hand, continuing the policy efforts to arrest demand pressures, the government and the SBP announced further corrective measures in the ongoing year.
