Agriculture revival bangs ADB’s forecast on growth

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The Asian Development Bank has forecasted Pakistan’s growth estimated to still be above for the last budget year 2016-17 because of the turnaround in the agriculture sector along with increasing consumer demand and construction activities, stated by the Bank.

ADB, in addition to its flagship Asian Development Outlook (ADO) for 2017 report, said the initial growth estimate for the economic year 2017 by the government ended 30 June, “beat ADO 2017 forecasts.”

“In Pakistan, the revival of agriculture has supported the growth, as well as by continued increase in construction and steady growth in services”, the bank said. “The largest contributor to growth is strong private consumption”.

For the FY17, the estimated growth rate of government was 5.3% that are higher than 10 years growth. The growth edges up to 5.2% in April 2017 he said. The registered growth of an agriculture sector was 3.46% in last FY year because of the healthy output of major crops like wheat, cotton, and sugarcane.

In Pakistan, high yield of crops has created an impact on the international market with a 13-month low price of sugar. The sugar price decreased to 28.5% after year on year in June and also expecting to have output from Brazil and others larger exporter from Pakistan. ” Manila-based lender said in the supplement.

The surplus amount of sugar encourages the government export it. Pakistan has a demand of 4.5 million tons of approximate production of six million tons of sugar a year

The industrial sector of Pakistan has shown the 5.02% of the growth and 5.98% of the services sector for FY17.

The economic outlook for South Asia robust and supported the ADO 2017 growth projections of 7 percent for 2017 and 7.2 percent for 2018.

Bangladesh has also beaten the outlook due to its agriculture sector’s growth and solid performances in wholesale and retail trade, real estate, hotels and restaurants, and transport.

In India, growth decreased to 7.1 percent in the FY 17 ended 31 March from 8% in the previous year owed to the demonetization and replacement of high-denominated banknotes that has affected economic activities, especially in several cash-dependent sectors.

However, kept growth forecasts 7.4% for FY17 for the region’s second biggest economy and 7.6 percent for FY18 as per ADB supplement.

The bank cut inflation forecasts for South Asia to 4.2 percent from 5.2 percent in 2017 and to 4.7 percent from 5.4 percent in 2018, prompted by lower increases in Bangladesh, Bhutan, India, and Nepal.

“Bangladesh is experiencing a decline in nonfood inflation, reflecting favorable international prices”, it said. “In India, inflation remained passive for FY2016, averaging 4.5%.  Since April 2017 prices have remained surprisingly soft as food inflation was sharply cut by improved domestic supply, higher imports, and lower global prices.”

ADB further said fuel inflation has still been benign, reflecting the softening of global crude oil prices. Lower gold prices and discounts offered by retailers to clear inventory ahead of the implementation of the Goods and Services Tax contributed to a drop-in core inflation in the first quarter of FY2017.

Inflation in India is now expected to average 4% in FY2017, well below the forecast of 5.2%t in ADO 2017, before rising to 4.6% in FY2018.


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Published in: Volume 08 Issue 30

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