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UNO projection for Pakistan and Bangladesh economy

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The United Nations in its latest report titled “World Economic Situation and Prospects” has projected Pakistan’s growth rate at 2.1 percent for 2020 – 0.3 percent lower than the International Monetary Fund’s and the World Bank’s and 0.7 percent less Asian Development Bank’s. It has projected Pakistan’s GDP growth rate at 2.1 percent for 2020, stating that continued commitment to reform, combined with productive investment in infrastructure and strategic capacity development will be critical for the country to find its way back to its previous growth way. Pakistan has a stronger commitment to inflation targeting with a managed depreciation of the currency. But this is difficult by increases in energy tariffs that have been imposed as part of the fiscal reform package. Whereas the tightened monetary policy in Pakistan is anticipated to help move inflation towards target levels in years to come, the country’s inflation remains extremely exposed to fuel price fluctuations and weather conditions. A good harvest and consequently moderate food price inflation will be of critical significance for the region’s poor, whose household budgets are strongly connected to food prices. The economy down in India, the increasing recession in the Islamic Republic of Iran, and the fiscal and balance-of-payments crises in Pakistan have affected the outlook for many of the smaller economies in the region. Regional GDP growth fell faster than the global average, dropping from 5.6 per cent in 2018 to 3.3 per cent in 2019, but was eased by strong growth in Bangladesh, Bhutan, Maldives and Nepal. In Afghanistan, Bangladesh, Pakistan and Sri Lanka more than 30 per cent of youth are not in education, employment or training; in India, this figure is over 40 per cent. Female labour force participation in South Asia has reduced and is currently at 26 percent, compared with 52 per cent for Latin America and the Caribbean and 58 per cent for East Asia and the Pacific. Demographic pressures and rapid urbanization will further increase these problems.
The UN’s World Economic Situation and Prospects report has forecasted that, while Pakistan’s economy will continue to slide for the next two years, it may make a little recovery after 2021 based on improved tax collection as advised by the IMF and other reforms. The economy is a principal concern for the citizens of the country, hit by higher inflation with the food price hike rising above 25 percent. According to UN projections, Pakistan’s economy will grow by the estimated rate of 3.3 percent for the remainder of the 2019-20 financial years but is projected to dip 2.1 percent next year. This makes it among the lowest prosperous economies in South Asia. The Indian economy is expected to grow by 5.7 percent in the current fiscal year and rise to 6.6 percent in the year after that. For Bangladesh, the growth rate is at 8.1 percent this fiscal year and 7.8 percent in the next year. Pakistan will continue to struggle for some time yet is definitely disturbing. The main reasons for this are the problems with a balance of payments crisis and the burden of high public debt, forcing an arrangement with the IMF and corresponding fiscal tightening. Another of Pakistan’s problems is its declining economic growth. This has fallen to 0.4 percent, mainly because textile sales which comprise 60 percent of goods exports have declined largely. Bangladesh has moved ahead of Pakistan in the textile sector. There is hope that revenues from the tax rise and other government reforms may begin to bring in advantages after 2021, this will all rely on how effectively reforms can be carried out and who is genuinely taxed. Pakistan’s economic experts should watch carefully that IMF interference in many other countries has brought no long-term benefits to people and has contributed to worsening condition in their life. The income earners including traders are facing the main impact of harder taxation measures. Agricultural tax has not been discussed sufficiently among the probable measures that could be taken to accelerate revenue. Brazil has done well in improving the poor. Economist while doing planning may put at least think about the third of our people who live below the poverty first of all while implementing policies for the future. The UN’s evaluation is substantially more rational on several reasons with respect to State Bank of Pakistan in balancing a stronger compromise to inflation target with a managed depreciation of the currency.
The United Nations projected that Bangladesh’s economy would grow by 7.8 percent in the current fiscal year of 2019-2020, lower than the country’s GDP growth of 8.15 per cent in the previous fiscal year 2018-2019. The UN, report mentioned that Bangladesh’s strong dependence on the textiles and garment industry was a major weakness of the economy. The present economic growth of Bangladesh and some other South Asian countries also exposed significant weaknesses as all of these countries depend heavily on a small number of sectors for their economic development. Bangladesh, Bhutan and Maldives, however, has taken advantage of substantial economic opportunities created by global trade disputes and geopolitical tensions. Motivated by the development of its garment industry, which has thrived as a result of trade disputes between the United States and China, Bangladesh enjoyed unprecedented GDP growth of 8.1 per cent in 2019.The UNESCAP (2018), report stated that income inequalities increased in India, Bangladesh and Sri Lanka between the early 1990s and the early 2010s.Gender inequalities also remain high in the sub-region. Annual inflation rate may also rise to 5.9 percent in fiscal year 2020 from that of 5.1 percent in fiscal year 2019, the report projected. Bangladesh, one of the 15 least developed countries is growing above at least 7 percent as per the target 8.1 of the sustainable development goals. Several countries, including Bangladesh, were still involved in the construction of new coal-fired power plants in spite of increase in the pace of decommissioning and cancellation of about 1,034 planned or announced projects since 2015.