The Asian Development Bank is a regional development bank,based in Philippines.It is devoted to reducing poverty in Asia and the Pacific through inclusive economic growth, environmental growth and regional integration.The organization was established in 1966 and December 2016 marks 50 years of the development partnership in the region. ADB is owned by 67 members with 48 members belonging to the Asia and Pacific region.ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
The Asian Development Bank (ADB) has presented a welcoming news in its report for Pakistan, where ADB has forecasted further boost in Pakistan’s economic growth during 2016 and 2017, as a result of increasing investment in infrastructure.For Pakistan, The Asian Development Outlook 2016, forecast growth of 4.5% for FY 2016 and 4.8% in FY 2017 compared to a 4.2% in FY2015.
According to the ADB’s report,”Further improvements in energy supply, higher infrastructure investments, and an improved security environment will help push up growth in 2016 and 2017 for Pakistan.”
“Pakistan needs to stay the course of macroeconomic and structural reforms, in particular in revenue collection, the energy sector, and in revitalizing public sector enterprises that have been causing a fiscal drain,” said Werner Liepach, ADB’s Country Director for Pakistan
“These reforms are critical for fiscal and economic sustainability and to promote investment and economic growth”,He added.
The important notes published by ADO include the following Industrial Analysis :
1.Large scale manufacturing grew 3.9% in the first half of FY 2016 from a rise of 2.7% in the same period the year earlier, boosted by low raw material prices, expanded construction, and low interest rates.
2.Textile production grew by only 1% over the same period due to weaker demand in export markets and increased competition, with falling global commodity prices and heavy rains damaging cotton output.
3.Pakistan’s vital agriculture sector is expected to experience slower growth in FY 2016.
4.Low investment in human development has also left the country with a workforce lacking the skills needed to help the country compete in global markets and to increase productivity by producing goods with higher value.
The ADO views on Asian Economies and Pakistan’s neighbours
In a supplement to its Asian Development Outlook 2016 (ADO 2016) report, ADB has forecasted a decreased growth for the developing economies at 5.6% in 2016, below its previous projection of 5.7% which was released last March.
The growth in Asia and the Pacific’s developing economies for 2016 and 2017 will remain steady, due to strong performances from South Asian, East Asian and Southeast Asian economies. These performances will help to balance the softness from the US economy, and market shocks from the Brexit vote.
The Chief Economist of the Asian Development Bank – Shang Jin Wei stated,
“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small”.
While discussing Asia and Pacific’s economic status he said, “In light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region.”
According to ADB’s figures, Pakistan’s neighbour – India, is leading South Asia’s growth in 2016 – 2017, with the People’s Republic of China (PRC) being on track to meet earlier growth projections. According to ADO 2016, Indian economy is geared to attract more FDI despite weak exports in 2015. The strong public investments and Banking system could be the reasons supporting India’s growth mechanism. The Chinese economy however may face a comparative slowdown due to weak external demand and investments.Here,the government spending and consumption may make up for the slowdown.
The Role of CPEC
According to M. Ziauddin a senior journalist for Business Recorder, due to the improving economic stability of the country and Pakistan’s strategic location,the People’s Republic of China has been quick in signing a free-trade agreement with Pakistan.The ADO2016,also notes that CPEC, as well as other regional cooperation initiatives, are spurring development activity and market optimism for Pakistan.
According to ADO2016,to increase business confidence in the area- Pakistan needs to develop transport networks, a stronger mechanism for governance , a process that lowers the cost of doing business and an increased access to finance. These will allow entrepreneurs and investors to take decisions at a faster pace and improve productivity in general.