World Bank forecast

ISLAMABAD:The World Bank has revised Pakistan’s economic growth forecast downward to 3% for the current fiscal year, citing the adverse spillover effects of escalating tensions in the Middle East. Read More: https://theboardroompk.com/netanyahu-signals-war-with-iran-unfinished-business-despite-pak-mediated-ceasefire-backed-by-us/ War-driven economic pressures The lender reduced its earlier projection by 0.4 percentage points, warning that the ongoing regional conflict is likely to dampen Pakistan’s economic recovery. According to the report, higher global oil and energy prices triggered by the conflict are increasing import costs and adding pressure on the country’s external account. Pakistan’s current account is now projected to shift into a deficit of 1.2% of GDP, equivalent to around $4.9 billion, significantly higher than earlier official estimates. Inflation, remittances and fiscal risks The report also highlighted rising inflationary risks, projecting inflation at around 7.4% due to higher energy and commodity prices. Elevated fertiliser costs may further strain agricultural output, potentially leading to increased food prices in the coming months. Additionally, remittance inflows from Gulf countries could weaken as oil-dependent economies adjust to changing conditions, further impacting Pakistan’s external position. The World Bank warned that sustained high energy prices could force central banks to keep interest rates elevated for longer, slowing economic activity. Despite these challenges, GDP per capita is expected to grow modestly by 1.4%, indicating limited improvement in living standards. The downgrade underscores growing vulnerability in Pakistan’s economy as global uncertainties, particularly geopolitical tensions, continue to reshape macroeconomic prospects.