Pakistan is undergoing economic crisis, which not only includes internal but external crisis as well. Recently, the price of U.S Dollar has risen to Rs. 134 due to which Pakistan has suffered inflation and a sharp increase in the ever-increasing international debt. The stock market of Karachi fell with more than 1,300 points was another shock Pakistan suffered this week.
With all these crisis on our heads, World Bank has prepared a report on Pakistan’s economy that suggests that Pakistan’s economy will slow down in the following two years. Pakistan has suffered a 4.8% drop in the growth rate for the Fiscal Year 2019. The inflation has risen by 5.9% this year. Pakistan’s real effective exchange rate has been struck with a 9.1% fall. The growth of imports is partly the result of China-Pakistan Economic Corridor (CPEC). The growth rate may recover 2 years later and may rise again to 5.2%.
The World Bank further predicts that the inflation rate might increase to 8% next year and could remain high for another year because Pakistan allowed its currency to devalue. The State Bank of Pakistan did its best to stop Pakistani rupee from devaluation in the FY 2018 but it only led to the decline in international reserves.
The reports further warns that Pakistan has lost its ability to withstand any external shocks and risks. Pakistan will need external financing more than ever due to the need for payment of debts and for continuing the projects like CPEC. The Government of Pakistan has estimated a total of $31 Billion needed for financing this year and may have to knock the doors of IMF again if no other alternative is arranged.
Source Image: http://www.euexperts.eu