NEW YORK, May 17 (APP):Pakistan, which faces significant economic challenges, is expected to have \u201cmodest economic growth\u201d, with its Gross Domestic Product (GDP) projected to expand by 2 per cent in 2024, according to a major United Nations report.
\nNoting that Pakistan had entered into a Stand-by Arrangement with the International Monetary Fund (IMF) worth $3 billion, the mid-year World Economic Situation and Prospects report said that the programme was expected to help stabilize the economy, increase the country\u2019s foreign exchange reserves, and facilitate fiscal adjustment while also protecting crucial social spending.<\/p>\n
At the same time, it said that in South Asia tight financial conditions and fiscal and external imbalances will continue to weigh on growth in the near term.
\n\u201cIn addition, geopolitical tensions \u2013 including the ongoing war in Ukraine and the conflict in Western Asia \u2013 will expose net-oil-importing countries in the region, including India, to the risk of sudden oil price spikes.\u201d
\nMost countries in South Asia, according to the report, experienced currency depreciation pressures during the second half of 2023. Between July and October, the United States dollar climbed by around 6.5 per cent against a basket of global currencies, reaching its highest level in 11 months, mainly supported by the strong performance of the American economy and high interest rates.<\/p>\n
\u201cThus,\u201d it said, \u201cbetween July and October, the Sri Lanka rupee depreciated by 3.2 per cent against the U.S. dollar, while the Indian rupee depreciated by 1.2 per cent. After raising policy rates in 2022, most central banks in South Asia paused monetary tightening or started lowering their key policy rates in 2023, with a few exceptions.
\nIn this regard, the report noted that the State Bank of Pakistan has kept its policy rate unchanged at a record high of 22 per cent since June 2023.
\nIn 2023, it said, the number of people facing acute food insecurity increased in Bangladesh and Pakistan and decreased in Sri Lanka. Afghanistan continued to be the country most affected by the food crisis in the region, with around 46 per cent of the population facing acute levels of food insecurity.<\/p>\n
Ever-worsening climate shocks are also a challenge, threatening decades of development gains, especially for the world\u2019s Least Developed Countries (LDCs) and small island developing States (SIDS), the report said.
\n\u201cDroughts intensified considerably during July and August (2023), affecting most of India, Nepal, and Bangladesh, while Pakistan recorded above-average rainfall,\u201d it said.
\nAs far as the global economy is concerned, it is now forecast to grow by 2.7 per cent in 2024 (an increase of 0.3 percentage points from the forecast in January) and 2.8 per cent in 2025 (an increase of 0.1 percentage points).
\nThese changes are mainly due to better-than-expected performance in some large developed and emerging countries, notably Brazil, India, Russia and the United States, the report said.
\nInflation is also down from the 2023 peak, said Shantanu Mukherjee of the UN Department of Economic and Social Affairs (DESA), presenting the report to reporters in New York.
\n\u201cIn developed countries, tight labour markets are seeing wage increases for some parts of the population and also drawing people into the labour force, which is important,\u201d he added.<\/p>\n
However, the outlook is only cautiously optimistic in the face of higher-for-longer interest rates, debt sustainability risks and continuing geopolitical tensions.
\nEven though prospects for SIDS are being revised upwards to about 3.3 per cent each year, Mukherjee said this is still below the pre-pandemic average, meaning that \u201clost ground is still not being made up.\u201d
\nIn the case of Africa and LDCs in general, prospects are revised downward to about 3.3 per cent growth in 2024.
\n\u201cThis is particularly worrying because Africa is home to about 430 million living in extreme poverty and close to 40 per cent share of the global undernourished population,\u201d Mukherjee explained. Furthermore, two-thirds of the high-inflation countries listed in the report are on the continent.
\n\u201cIn 2024, over a quarter of public revenues on average in this continent went towards interest payments. That\u2019s again about 10 percentage points more than the average over the years immediately preceding the pandemic.\u201d
\nFor developing countries, on average, the debt situation is not as dire, but he was concerned that investment growth continues to fall, it said.
\nThese \u201cdownsides\u201d are further compounded by risks such as inflation, which is both a symptom of the underlying fragility and a concern on its own.
\nThe report also contains a special section on critical minerals such as lithium, nickel, cobalt, and copper, that are essential for the transition to clean energy.
\nCountries that possess these resources will, however, need smart policies, as well as effective implementation capacities to reap the benefits.
\nMineral-sector-driven growth has in the past often been associated with environmental damage, stunted development of other sectors, poverty, conflict, and other adverse outcomes collectively known as the \u201cresource curse\u201d.
\n\u201cIt is imperative for developing countries to design and implement well-targeted and timely economic, social, and environmental policies to optimize the benefits of their critical minerals endowments and avoid another cycle of resource curse,\u201d the report said.<\/p>\n","protected":false},"excerpt":{"rendered":"
NEW YORK, May 17 (APP):Pakistan, which faces significant economic challenges, is expected to have \u201cmodest economic growth\u201d, with its Gross Domestic Product (GDP) projected to expand by 2 per cent in 2024, according to a major United Nations report. Noting that Pakistan had entered into […]<\/p>\n
\n","protected":false},"author":16,"featured_media":106908,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-106907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-world-news"],"yoast_head":"\n