ADB raises Pakistan’s growth forecast to 3%, approves $530 million in additional loans
The Asian Development Bank (ADB) has raised Pakistan’s growth forecast for the fiscal year 2024-25 to 3%, citing improved industrial activity due to relaxed import restrictions and better foreign exchange availability. The inflation projection was also revised downwards to 10%, reflecting easing economic pressures.
In its Asian Development Outlook report, the ADB highlighted that Pakistan’s economic stability has been supported by the IMF programme approved in September. The suspension of restrictive import measures, enhanced investor confidence, and a more accommodative monetary policy are expected to drive industrial recovery. However, the 3% growth projection remains below the government’s target of 3.6%, signaling ongoing macroeconomic challenges.
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Despite industrial gains, the ADB forecasted a weaker performance for Pakistan’s agriculture sector, citing flood-like conditions caused by heavy monsoon rains in July-September 2024. Poor outputs of key crops like wheat and cotton have hindered the sector’s recovery.
The report noted a significant decline in inflation, with the Consumer Price Index dropping to a six-year low of 4.9% in November. This improvement was attributed to high base effects, better food supply, favorable global commodity prices, and delayed energy price adjustments.
In addition to revising forecasts, the ADB approved two loans totaling $530 million for Pakistan. The first, a $330 million financing package, will strengthen the Benazir Income Support Programme (BISP). The initiative aims to expand climate-resilient social protection measures, improve education access for children from poor families, and increase health and nutrition services in disaster-prone areas.
The second loan, worth $200 million, focuses on modernizing Pakistan’s power distribution infrastructure. The Power Distribution Strengthening Project will upgrade systems for three major companies: Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), and Sukkur Electric Power Company (SEPCO). Key upgrades include advanced metering systems, real-time performance monitoring, and enhanced grid station voltage to reduce transmission losses and meet rising electricity demand.
While raising Pakistan’s growth projection, the ADB also lowered India’s forecast from 7.2% to 7%, citing weaker manufacturing performance. Regionally, the ADB warned of potential impacts from future U.S. policy changes, which could affect growth and inflation in Asia-Pacific economies.
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