Pakistan’s economy may grow at a pace of 2% in the current fiscal year - the fifth lowest pace among South Asian countries, and Islamabad also remains at the rock bottom of global Wellness Index, said a new report of the Asian Development Bank (ADB).
The Asian Development Outlook - Update, released on Tuesday, showed that the Maldives, which was the worst affected by the spread of coronavirus pandemic, could grow at the fastest pace of 10.5% among eight South Asian nations.
India, the second worst affected country economically by the pandemic, is projected to grow at a rate of 8% in 2020-21, followed by 6.8% growth in Bangladesh and 4.1% in Sri Lanka.
“(Pakistan’s) Growth is forecast to recover in fiscal year 2020-21 as economic sentiment improves with the expected subsiding of Covid-19 and the resumption of structural reform,” said the ADB’s flagship publication.
Islamabad secured only 27.24 marks on the global Wellness Index, standing at 149th position among 153 nations. The Central African Republic, Chad, Nigeria and Afghanistan were the only nations that trailed Pakistan.
The ADB’s projections are in contrast to the government’s claim that Pakistan’s economy is recovering at the fastest pace in the region. The only three countries that will grow at a pace lower than that for Pakistan are Bhutan (1.7%), Afghanistan and Nepal (1.5%).
In the last fiscal year, Pakistan’s economy contracted 0.4% compared with 20.5% contraction in the Maldives and 9% contraction in India. The ADB’s 2% economic growth projection is in line with Pakistan’s growth target of 2.1%.
The ADB said its forecast of 2% gross domestic product (GDP) growth assumes that Covid-19 impact will subside by the end of 2020 and the resumption of structural reform under an ongoing International Monetary Fund (IMF)’s Extended Fund Facility to address macroeconomic imbalances.
The regional lender noted that agriculture is expected to continue to lend impetus to GDP growth. Growth in industry is forecast to improve in FY21, led predominantly by construction and small-scale manufacturing.
Spurred by improved growth in agriculture and industry, coupled with an expected improvement in domestic demand overall, services should also contribute to growth in the current fiscal year, according to the report.
Fiscal deficit is forecast to decline to 7% of GDP in the current fiscal year as compared to 8.1% in the last fiscal year. However, the current account deficit is anticipated to widen to 2.4% of GDP against 1.1% in the last fiscal year.
The ADB said remittances should continue to cushion the current account deficit but will likely be lower than the peak of $23.5 billion in the last fiscal year due to “layoff of Pakistani workers overseas, in particular in the Persian Gulf, as economic activity remains soft globally”.
Rising food prices pushed inflation to 10.7% in the last fiscal year, which is now projected to slow to 7.5% this fiscal year.
“Pakistan has achieved notable success in containing the dual health and economic challenge presented by Covid-19,” said ADB Country Director for Pakistan Xiaohong Yang.
As the curve flattens and business activity resumes, the economy is showing signs of resilience and recovery, she added.
Quantifying wellness
Along with the GDP growth forecast, the ADB has also shared findings of a new benchmark for determining the happiness of citizens of different nations under the Wellness Index. This index too does not project a good health for the economy and society.
Out of 153 countries, Pakistan got a score of only 27.24, which placed it at 149th spot. Only four nations have performed worse than Pakistan. These are Afghanistan (23.56), Nigeria (23.75), Central African Republic (14.17) and Chad (8.38).
Gross domestic product (GDP) per capita has been used historically as a de facto measure of a country’s success and wellbeing. While GDP captures material wellbeing, it often does not provide a comprehensive measure of wellness, underlined the ADB report.
It added more recently, a clamour has arisen to use more holistic measures of wellbeing. One such measure is the Wellness Index, which follows the Global Wellness Institute definition of wellness with four pillars or dimensions - physical, intellectual, environmental and social.
The Wellness Index adopts a bottom-up approach, defining wellness at the individual level, which distinguishes it from other aggregate measures of national wellbeing.
“Evenly spread Asian rankings show the Republic of Korea and Singapore on top and Pakistan and Afghanistan at the bottom end,” said the ADB.
Over one-third of Pakistani population does not have sufficient physical activity. This ratio is 20% in men and 43.4% in women, according to the ADB report.
The recreational physical activity participation rate is only 13.2% in Pakistan, which is the lowest in the Asia-Pacific region.
Lower middle-income countries such as India and Pakistan face many challenges, including insufficient medical treatment, meagre healthcare budgets typically at less than 1% of GDP, lack of capacity to spend funds effectively, dilapidated facilities and critically low number of mental health professionals.
Published in The Express Tribune, September 16th, 2020.
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Pakistan economy is performing much much more better than Indian economy which is sposedly will be fall at - 9% in the end of fiscal year
02 Things government should immediately do: 1. Short term: Establish Poly technique institutes across the country with aim to focus on export oriented sector and also sectors where man power could be exported such as IT, plumbing, electrician for appliance repairs, etc. These would provide much needed job boost to the large unemployed (Low Quality) educated youth 2. Long Term: Invest of HR through quality education. This is the only way to increase per capita GDP of the country.
I dont agree with it all. the indian economy which shrink this year how is going to bounce like spring to 10%. states in india do not have fund to pay salaries of the govt employee how they are going to spend on development project when they do not invest in development project who they gonna achieve that 10% GDP growth. This report is clearly biased by ADB. Also the Covid situation in Pakistan has been overcome but India still is recording highest number of cases. It business activities will remain to be affected till next year.