Pakistan’s economy is set to grow by a robust 5.4 percent by 2018 as Chinese investment from a multi-billion dollar infrastructure project flows into the country, the World Bank predicted in a new report on Thursday.
The cash-strapped country, for years plagued by a bloody homegrown Taliban insurgency, has been battling to get its shaky economy back on track and solve a chronic energy crisis that cripples its industry. But now confidence in South Asia’s second-biggest economy is growing, with security improving and the International Monetary Fund claiming in October that it has emerged from economic crisis after completing a bailout program, though it still faces major challenges.
Pakistan recorded a 4.7 percent growth in gross domestic product (GDP) for the fiscal year that ended June 2016, the highest rate in eight years, and Prime Minister Nawaz Sharif has set an ambitious target of 5.7 percent for the current year. He is banking on structural reforms, the improved energy sector, taxation—and China’s ambitious $46 billion infrastructure project, the China-Pakistan Economic Corridor (CPEC), linking its western province of Xinjiang to the Arabian Sea via Pakistan.
The World Bank report appeared optimistic about his plans, predicting even further growth in 2018. “The pace of Pakistan’s economic growth will accelerate to 5.4 percent in fiscal 2018,” the Bank report said, observing that a moderate increase in investment mainly related to CPEC projects is expected to contribute to an acceleration of growth.
The Bank also noted Pakistan’s efforts to address grinding poverty, including with revised ways to measure it. “Based on the revised poverty line… the percentage of people living below the poverty line decreased from 64.3 percent in 2002 to 29.5 percent in 2014,” the report said.
Illango Patchamutu, World Bank country director for Pakistan, said the country needs to push forward with deeper structural reforms, and that the World Bank stood ready to support such an agenda.