World Bank slashes Pakistan GDP growth projection to 2% as crisis worsens

The World Bank on Tuesday slashed Pakistan's economic growth by half -- from 4 per cent to 2 per cent for the current fiscal year, saying that Islamabad faces mounting economic difficulties, reported The News International.

"Nonetheless, Pakistan faces mounting economic difficulties and Sri Lanka remains in crisis. In all regions, improvements in living standards over the half-decade to 2024 are expected to be slower than from 2010-19," read the World Bank in Global Economic Prospects report.

Pakistan's economic condition is precarious with low foreign exchange reserves and large fiscal and current account deficits, has further worsened by severe flooding.

About one-third of the country's land area was affected, damaging infrastructure, and directly affecting about 15 percent of the population, reported The News International.

Moreover, Pakistan, with low foreign exchange reserves and rising sovereign risk, saw its currency depreciate by 14 per cent between June and December and its country risk premium rise by 15 percentage points over this same period.

Recovery and reconstruction needs are expected to be 1.6 times the FY2022/23 national development budget (Government of Pakistan), reported The News International.

The flooding is likely to have seriously damaged agricultural production -- which accounts for 23 pc of GDP and 37 pc of employment -- by disrupting the current and upcoming planting seasons and pushing between 5.8 and 9 million people into poverty. Policy uncertainty further complicates the economic outlook.

Pakistan's consumer price inflation reached 24.5 per cent in December on an annual basis, recently coming off its highest rate since the 1970s, reported The News International.

This is mainly due to weak growth in Pakistan, which is projected at 2 per cent in FY2022/23, half the pace that was anticipated last June.

Meanwhile, amid biting inflation and shrinking purchasing power, the Oil and Gas Regulatory Authority (OGRA) has dropped a gas bomb on the masses as it increased the tariff for consumers of two sui gas companies by up to 74 per cent, effective from July 2022, reported Geo News.

The regulator, in a notification issued on Wednesday, hiked the tariff of Sui Northern Gas Company Limited (SNGPL) and Sui Southern Gas Company (SSGC) for household consumers, commercial sector, tandoors, captive power plants and general industries, including the export-oriented sector.

The regulator has abolished the earlier applicable slabs of gas consumption and their respective rates and fixed the price at 952.17 per Million British Thermal Unit (MMBTU) for Sui Northern Gas Company Limited (SNGPL) consumers. Likewise, for Sui Southern Gas Company (SSGC), the prescribed prices have been fixed at Rs 1161.91/MMBtu.

Having a cursory look at the decision, lower slabs who consume less and are almost poor consumers are most affected as their gas prices have tripled, while for the higher slabs, the prices have been literally reduced.