World Bank Cautions Pakistan on Economic Risks of 2024 Elections

The World Bank has issued a cautionary note on the economic outlook of South Asian countries, including Pakistan, that are facing or planning national elections in 2024. The bank said that the uncertainty and potential unrest around these elections could hurt private sector activity, foreign investment, and economic growth.

In its Global Economic Report, the bank also said that countries with weak fiscal positions, such as Pakistan, could face further challenges due to increased spending ahead of the elections. The bank advised these countries to implement policies to reduce uncertainty and boost growth potential after the elections.

According to the report, Pakistan’s economy is expected to grow by only 1.7% in the current fiscal year ending June 2024, as monetary and fiscal policies remain tight to contain inflation and debt-service payments. The bank said that weak confidence due to political turmoil will also slow down private demand.

The bank projected that Pakistan’s growth will improve to 2.4% in the next fiscal year, as inflationary pressure eases. However, the bank warned that rising food prices, which affect the poor and the vulnerable more, could increase poverty and inequality in the country.

The bank also highlighted the risks of financial market disruptions for countries with high external and fiscal financing needs, such as Pakistan, Maldives, and Sri Lanka. The bank urged these countries to strengthen their macroeconomic stability and resilience.

The report also mentioned the possible impact of the escalation of the ongoing conflict in the Middle East on the region’s food security and trade. The bank said that countries under major security threats, such as Afghanistan, could face further challenges due to the conflict.

The World Bank’s report comes at a time when Pakistan is facing multiple economic and political challenges, such as low growth, high inflation, fiscal and current account deficits, debt burden, exchange rate volatility, and social unrest. The country is also under an IMF program that requires it to undertake structural reforms and fiscal consolidation.

The upcoming elections in 2024 are likely to add to the uncertainty and volatility in the economy, as political parties gear up for the campaign and the possibility of social unrest and violence increases. The government will have to balance its electoral promises with its fiscal commitments, while also ensuring that the economic recovery is sustained and inclusive.

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