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Pakistan’s Economy will Weigh on Growth in the Region: IMF Official

WASHINGTON – The Pakistani economy is expected to slow considerably and weigh on the overall growth rate of the region, said Jihad Azour, director of the Middle East and Central Asia Department of the International Monetary Fund.
In a recent discussion on MENAP’s economic prospects (Middle East, North Africa, Afghanistan and Pakistan), Azour said global economic hurdles made political efforts more urgent and difficult for the MENAP.
For oil importers in this region, growth is expected to slow to 3.6 percent from 4.2 percent in 2018, in part because of the deteriorating global economic environment.
Azour noted that in many oil-importing countries, rising indebtedness was an increasingly urgent challenge to macroeconomic stability and that high debt also limited fiscal space for essential investments in the economy, health, education, infrastructure and social programs.
These fiscal pressures have highlighted the urgency of restoring growth in the medium term through structural reforms such as measures to improve the business environment and governance, enhance labor market flexibility and enhance competition in the markets, said the IMF.
In the MENAP, “the slowdown in global growth and trade, as well as geopolitical tensions and other potential external shocks, will pose economic challenges,” said the director, adding that “these trends accentuate the urgency of putting reforms that strengthen economic resilience and ensure inclusive growth.”
In a related report, the IMF also sounded the alarm about global debt. Noting that global debt now stands at $164 trillion or 225% of global GDP, the Fund warned that the public and private sectors were more in debt than at the time of the 2008 financial crisis, when the global debt-to-GDP ratio peaked at 213%.
While the advanced economies were responsible for most of the world’s debt, emerging markets were responsible for most of the increase, with China alone contributing 43% to the rise in global debt since 2007.
The report highlighted the need to reduce the debt burden in the private and public sectors in order to improve the resilience of the global economy and urged heavily indebted countries to increase their incomes or limit their excessive spending.
“This is particularly relevant when current economic growth exceeds potential long-term growth,” he added, while stressing the need for governments to maintain investments in education, health and infrastructure, “redefining spending priorities or broadening the tax base.”
Recognizing that in order to achieve sustainable growth, these countries will require additional public spending, the report calls on them to “pursue smarter and more agile policies to facilitate change”.
(Sahar News Monitoring Desk)

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