SBP expects real GDP growth in the range of 2-3 percent in FY24.

KARACHI -- The State Bank of Pakistan (SBP), Monday, said that Pakistan's economic situation started to show some early signs of improvement and real GDP growth is expected to remain in the range of 2-3% while inflation may subside to 20 to 22% in FY24.

The Central Bank, in its Annual Report on the State of Pakistan's Economy for the fiscal year 2022-23 released here, underscored the need of initiating broad-ranging reforms to ensure the availability of resources for economic growth and development and also stressed expediting tax policy reforms and speedy implementation of governance reforms in PSEs terming them instrumental to create fiscal space for public investment in human and physical capital.

The SBP also underscored the need to create a conducive environment to support foreign direct investment in exportable sectors and encourage technology transfers, coupled with agriculture sector reforms that were required to alleviate import reliance and for achieving price stability.

'There is a need to expedite these reforms to achieve a high and sustainable economic growth required to absorb the new entrants in labor market, improve social welfare and raise the general standard of living in the country,' the SBP suggested.

The report highlighted that Pakistan's economic situation has started to show some early signs of improvement as the country has been able to secure a US$ 3.0 billion Stand-By Arrangement (SBA) from IMF, towards the end of FY23, which helped in alleviating near-term risks to external sector.

The high-frequency indicators are suggesting bottoming out of economic activity from July 2023 while withdrawal of guidance on import prioritization, alongside gradual ease in FX position, was expected to somewhat ameliorate the supply chain situation and lift growth in LSM as well as exports, it said. The expected rebound in cotton and rice production will support agriculture growth in FY24 and SBP while reflecting these considerations expects real GDP growth in the range of 2-3 percent in FY24.

The lagged impact of monetary tightening, and other contractionary measures, were expected to keep domestic demand in check, the SBP forecast adding that the prospects of improvement in the supply situation on account of likely increase in production of important crops and imports is expected to bring down inflation in the range of 20.0 - 22.0 percent in FY24.

'Slightly improved global and domestic growth prospects are expected to bolster...