WASHINGTON : The International Monetary Fund on Friday said Pakistan’s economy will continue to accelerate in the medium term as it revised upwardly the GDP growth rate at the back of strong manufacturing and reforms.
The Fund, which in a sign of confidence in the country’s reforms progress this week released $ 555.6 million second tranche of the $ 6.7 billion program, also noted in its review that Pakistan’s performance mostly remained positive.
The fiscal year 2013/14 GDP growth forecast has been revised upward slightly to 3.1 percent. It acknowledged that the manufacturing sector continues to be stronger than last fiscal year due to partial easing of electricity shortages.
According to Jeffrey Franks, the IMF mission chief for Pakistan, the “3.1 percent may still be a bit on the conservative side.”
“So we see indicators of growth that are relatively strong considering the fiscal adjustment that has taken place,” Franks explained.
“For FY 2014/15, growth is forecast to accelerate to about 3.7 percent, and will continue to accelerate in the medium-term as fiscal adjustment eases and structural reforms help
alleviate binding constraints in the energy sector, improve efficiency, and enhance the investment climate.”
The Fund confirmed that the preliminary data for the first quarter of FY13/14 recorded 5 percent growth, mainly driven by services and manufacturing.
“This growth is stronger than the 2.9 percent posted during the same period in the previous year. It appears to be supported by large scale manufacturing, with annual growth of almost 5.2 percent in the first five months of the fiscal year.”
Goods exports and imports in dollar terms increased by 3 and 1.4 percent respectively year-on-year in December, the review said.
The Fund also said that despite difficulties, the current PML(N) government in Islamabad retains a strong commitment to economic reforms.
The report also referred to internal security challenges facing the country in the form of extremist violence but also noted that economic developments have been slightly better than expected.