ISLAMABAD: Asian Development Bank (ADB) forecast higher than expected inflation in Pakistan, mainly due to rising energy tariffs and higher domestic commodity prices due to rising prices global commodity markets.
In its Asian Development Outlook (ADO) supplement, the Manila-based lending agency also lowered the economic growth forecast for South Asia to 8.6%, from its previous projection of 8.8%, and raised the inflation forecast to 5.9%, from 5.8% of the inflation he had previously estimated for the current year.
“Much of the forecast upgrade reflects a higher projection for Pakistan, where adjustments in energy tariffs and higher global commodity prices are expected to put upward pressure on domestic prices.” , reported the ADO supplement without actually projecting an inflation figure.
Energy tariff adjustments, rising global commodity prices likely to exert upward pressure on domestic prices
In September, however, the ADB estimated inflation for Pakistan at 8.9% for the current fiscal year and 7.5% for fiscal year 22. The ADB also noted that the production of cotton and cotton Pakistan’s sugarcane rose with favorable weather conditions, while services rebounded as mobility tracking measures surpassed March 2020 levels before the pandemic.
The report says South Asia is expected to grow less than expected in its September 2021 update, reflecting a modest downward revision to India’s GDP growth forecast, with manufacturing now expected to grow more slowly than expected. in the update.
In contrast, other economies in the region have benefited from higher global demand and a rebound in national activity with Covid-19 largely contained in the sub-region – South Asia. Overall, the GDP growth forecast for the sub-region in 2021 is lowered from 8.8% in the update to 8.6% and maintained at 7% in 2022.
In India, a strong rebound in growth of 20.1% in the first quarter of FY2021 was followed in the second quarter by a moderation of growth to 8.4%, slightly below expectations, as a shortage of chips has hampered the production and sale of automobiles and many electronic products. GDP growth nonetheless remained strong, driven by growth in private consumption at 8.6 pc and investment at 17.2 pc.
On the supply side, growth in India was widespread, driven by a strong expansion of services, particularly public administration, defense and mining. Agriculture remained resilient with growth of 4.5%, while manufacturing growth moderated to 5.5%. Supply chain factors such as chip shortages and rising semiconductor prices will continue to dampen economic growth, as evidenced by double-digit contraction in October motor vehicle sales and electronic invoices in November 2021.
In Bangladesh, both exports and imports grew more than expected in the update thanks to a sharp increase in global demand for clothing. Faster growth in imports has widened the trade deficit, but growth will be supported by private investment with imports of machinery, equipment and raw materials for clothing.
The Maldives attracted more than one million tourist arrivals from January to October, an increase of 139.3% from the previous year. With the tourism rebound expected to continue through the peak season of the fourth quarter, the GDP growth forecast for 2021 is revised upwards, while the projection for 2022 is maintained.
Sri Lanka’s GDP grew 12.3% in the second quarter, taking first-half growth to 8.0%, beating earlier expectations with improvement across all sectors. However, Sri Lanka’s growth prospects for 2022 are clouded by macroeconomic headwinds as reserves have dwindled and large external debt repayments are due in 2022.
Posted in Dawn, le 15 December 2021