World Bank estimates 3.7 percent growth for 2013-14

The World Bank has estimated 3.7 percent growth rate for 2013-14, 0.4 percent lower than the Economic Survey 2013-14 and 0.4 percent higher than the estimates of the International Monetary Fund (IMF). The World Bank in its report, "Global economic prospects 2014," said in Pakistan, preferential market access by the EU (GSP Plus) could help boost export performance but energy supply shortages may hamper exporters.
Growth in Pakistan remains below the regional average but improving, with GDP in the 2013-14 fiscal year estimated to have grown 3.7 percent, broadly stable from previous fiscal year, but significant in the context of fiscal adjustment required to overcome the threat of a balance of payment crisis, the report added.
Pakistan''''s weaker growth relative to its peers mainly reflects significantly lower investment rates (as a share of GDP) in part due to energy-supply bottlenecks and security uncertainties. The report further maintained that Pakistan''''s export growth slowed more sharply in the first months of 2014 (with a decline in exports in April), reflecting in part pervasive electricity and natural gas shortages. In parallel, Pakistan''''s industrial production growth decelerated from 11.2 percent year-on-year at end-2013 to a 2.6 percent decline in March.
Regional growth should improve to 6.3 percent by 2016 helped by some progress on policy reforms in India, Bangladesh and Pakistan and a more supportive trade environment. However, medium term forecasts have been marked down by nearly half a percentage point reflecting the effects of slowing investment in recent years on potential growth, structural capacity constraints and sustained inflationary pressures. The report further projects medium-term growth in Pakistan at about 4 percent.
In Brazil, Turkey, Pakistan, Mongolia, Belarus, Zambia Ghana, Uganda and South Africa) inflation momentum has continued to accelerate and annual inflation has remained high in recent months. After peaking at 11.2 and 10.9 percent YoY, respectively in India and Pakistan in November 2013, retail inflation fell to about 8 percent in both countries in February, but most recently shows signs of having picked up again. In Pakistan, after the fiscal deficit ballooned to over 8 percent of GDP in fiscal year 2011-12, fiscal restraint is estimated to have reduced it to about 6 percent of GDP in fiscal year 2013-14.
Pakistan, after declining for several years, the country''''s investment rate is projected to rise during the forecast period (2014-16). The projected gradual revival of regional investment growth will depend to a large extent on credible efforts to reduce infrastructure and energy supply bottlenecks, create a predictable regulatory environment, implement labour market reforms, and continue fiscal consolidation.