A newly released Asian Development Bank (ADB) report reveals a grim economic reality in Pakistan. The nation faces the highest inflation rate in Asia at 25%, making it the continent's most expensive country to live in. This surge in living costs significantly surpasses previous records within South Asia.
The ADB report, released from Manila, Philippines, further projects a somber outlook for the next fiscal year. Inflation is anticipated to remain elevated at 15% – again the highest among 46 Asian countries. Economic growth is forecast at a mere 2.8%, ranking Pakistan among the region's slowest-growing economies.
Pakistan's central bank and government had aimed for a 21% inflation target this fiscal year, but substantial interest rate hikes (currently at 22%) have failed to curb the crisis. The ADB predicts the country's economic growth rate will be a mere 1.9% this fiscal year, ranking it among the lowest alongside Myanmar, Azerbaijan, and Nauru.
The economic pressures are placing extreme strain on Pakistan's population. The World Bank recently warned that another 10 million people could fall below the poverty line, adding to the 98 million already struggling. This paints a picture of a nation trapped in a devastating cycle of stagflation.
The ADB acknowledges the challenges Pakistan confronts in securing necessary external financing and managing debt burdens. Political instability has worsened the situation by undermining macroeconomic policymaking. The report stresses the vital role of multilateral and bilateral aid, along with continued IMF support, for Pakistan to regain economic stability.
Finance Minister Muhammad Aurangzeb is scheduled to meet with IMF Managing Director Kristalina Georgieva next week, seeking a new bailout package. However, the IMF MD has outlined significant reforms Pakistan must undertake, including expanding its tax base, ensuring contributions from wealthier citizens, and creating greater economic transparency.
