25% inflation, Pakistan has the highest cost of living in Asia

Logan D Suza

Inflation in Pakistan is expected to be 25 percent this fiscal year – the highest in Asia

According to a new report by the Asian Development Bank (ADB), Pakistan has the highest cost of living in Asia with an inflation rate of 25 percent. The country’s economy could grow at the region’s fourth-lowest pace of 1.9 percent, according to ADB. The Express Tribune reports that the Asian Development Outlook also paints a gloomy picture for the next fiscal year. They are estimating 15 percent inflation rate for the next financial year. The highest among 46 countries and a growth rate of 2.8 percent, the fifth lowest for the fiscal year 2024-25.

Inflation in Pakistan is expected to be 25 percent this fiscal year – the highest in Asia, the Manila-based lending agency said. This will make Pakistan the most expensive country in Asia. Earlier, the cost of living in Pakistan was the highest in South Asia.

The State Bank of Pakistan (SBP) and the federal government had set an inflation target of 21 per cent for this fiscal year, but they are set to face huge losses as interest rates stand at 22 per cent. ADB said the country’s economic growth is likely to remain at 1.9 percent this fiscal year – the fourth lowest behind Myanmar, Azerbaijan and Nauru. Pakistan’s economy has been stagnating for a long time, and the World Bank said last week that another 10 million people could fall into poverty due to adversity.

Almost 98 million people are already living in poverty in Pakistan. In the past, ADB has outlined an optimistic economic scenario close to government forecasts for Pakistan. The latest ADB report states that Pakistan will face challenges from substantial new external financing requirements and rollover of old debt, exacerbated by tighter global financial conditions. The Manila-based lender said the political uncertainty that has affected macroeconomic policymaking will jeopardize the country’s stability and reform efforts.

Due to Pakistan’s large external financing needs and weak external buffer, disbursement of funds from multilateral and bilateral partners is important. The country’s Finance Minister Muhammad Aurangzeb is to meet IMF Managing Director Kristalina Georgieva in Washington next week to request a new bailout package. Kristalina said that the problem of Pakistan is very important. The tax base, how the wealthy segment of the society contributes to the economy, how government spending is managed, and creating a more transparent environment will determine the trajectory of the country’s economy. ADB said low confidence, rising cost of living and the implementation of tighter macroeconomic policies under the IMF program will curb Pakistan’s domestic demand.

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