GDP growth to decelerate: ADB

An increase in inflation rate for Pakistan to 11.5 percent and a further downward revision of GDP growth rate to 2.6 percent for 2020 has been projected by Asian Development Bank attributed to a rise in food prices, with planned utility price hikes taking effect with constrained domestic demand as COVID-19 takes its toll.
ADB in its report titled "Asian Development Outlook 2020, what drives innovation in Asia? The Impact of the coronavirus outbreak", stated that leaving aside external upheaval, growth in Pakistan will slow as agriculture stagnates, notably affecting cotton output, and as stabilization efforts constrain domestic demand. The intended correction of macroeconomic imbalances in Pakistan should restore confidence in the economy and bring later benefits.
The GDP growth is forecast to decelerate to 2.6 percent in fiscal year 2020 as ongoing stabilization efforts further curtail economic activity. Agriculture is expected to see slow growth as the worst locust infestation in over 2 decades damages harvests of cotton, wheat, and other major crops.
Modest growth is expected in some export-oriented industries such as textiles and leather. However, large-scale manufacturing, which provides over half of industrial production, will likely contract, as it did in the first half of fiscal year 2020 when currency depreciation ran up production costs for some industries and forced them to raise their prices.
The ongoing COVID-19 outbreak will pose a downside risk to growth prospects as it further dampens consumer demand and as private businesses are temporarily shutdown in efforts to control the pandemic. Growth is expected to accelerate to 3.2 percent in 2021, driven by a rebound in investment as macroeconomic imbalances are corrected, currency depreciation is contained, and the locust infestation subsides.