World News | Pakistan will have 4 million people living below poverty line in FY23, says World Bank

Islamabad [Pakistan]6th April (ANI): The World Bank predicts that around 4 million people will fall below the low- and middle-income poverty line as economic growth plummets to just 0.4 percent, against a budget target of 5 percent, Dawn reported.

Meanwhile, the Asian Development Bank (ADB) expects Pakistan’s economic growth to slow to 0.6 percent from 6 percent last year due to the ongoing political crisis, economic damage from floods, foreign exchange challenges and tightening macroeconomic policies at home and abroad Challenging external environment.

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In its flagship Pakistan Development Update (PDU) 2023, the Washington-based leadership said that “without public transfers to compensate for lost income or mitigate the impact of price increases, poverty will be measured at the low- and middle-income poverty line ($3.65) per capita purchasing power parity in 2017) is projected to increase to 37.27 in FY23 compared to FY22, pushing an additional 3.9 million people into poverty.”

It added that “the depth and severity of poverty have also increased, reflecting the overlapping effects of multiple shocks and a lack of saving by households to mitigate short-term effects”.

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The World Bank estimated GDP growth at 0.4%, down from a previous estimate of 2% in January, Dawn newspaper reported.

It is not easy to write a report on pakistan at such a critical time with so much going on amid heightened focus on imf programmes, exchange rate fluctuations and floods etc, but all the usual structural issues that stand out is the reasoning behind the new figures, said Najy Benhassine, World Bank Country Director for Pakistan.

Benhassine also said that “the resolution of Pakistan’s economic crisis requires commitment to sustained macro-fiscal and structural reforms,” ​​adding that this would require both unlocking new financing, avoiding a balance-of-payments crisis, and laying the groundwork for private economic recovery. Investor confidence and higher growth over the medium term.

The urgency of these issues, therefore, calls for long-term change to stabilize the economy in times of uncertainty, which affects not only Pakistan but the rest of the world at the same time.

According to the study, a number of events — including floods and the impact of import restrictions on production and labor incomes in industries such as agriculture and textiles — adversely affected poor households.

This also includes high food inflation, which negatively affects the real purchasing power of all households, but especially poorer households, which lack the savings needed to sustain consumption despite rising costs. In addition, a possible decline in international remittances has had an impact on households.

“Downside risks to the outlook remain high,” the report’s author, Adnan Ghumman, said of politically driven fiscal policy against a backdrop of upcoming elections, constrained foreign exchange liquidity and uncertainty about external fund inflows, rising public levels. The downside, according to the Dawn report, is debt, banks’ growing exposure to the public sector, and political instability.

Agriculture, which has been affected by floods from 2022 to the first half of 2023, faced challenges in obtaining basic inputs, while large-scale manufacturing (LSM) shrank by 3.7% due to stricter policies and import restrictions, he said. As a result, the services sector has been hit by rising costs and falling business and consumer confidence, while inflation hit multi-decade highs in the first half of the year.

Gurman said the country’s external situation was deteriorating despite efforts to reduce the current account deficit and consolidate. The fiscal deficit rose in the first half of the fiscal year due to higher debt servicing costs.

The macroeconomic situation remains uncertain due to the banking sector’s growing exposure to sovereigns in recent years and depends on the successful implementation of key reforms, Dawn reported.

According to the World Bank, all estimates are inextricably linked to the IMF’s plan, which stipulates that Pakistan should implement and maintain structural and macroeconomic reforms as the country faces numerous dangers from rising public debt levels and falling foreign exchange reserves. This would ensure the additional spending and external financing necessary to regain macro stability and trust.

According to the research, the slowdown in GDP growth is due to catastrophic floods in the summer of 2022, lower confidence, import restrictions, delayed fiscal tightening, and setbacks in private sector activity.

In FY23, Pakistan faced devastating floods and rising global commodity prices following the Russian invasion of Ukraine, Dawn reported. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)