Latest news with #structuralreforms
Arab News
09-06-2025
- Business
- Arab News
Pakistan expects 2.7% economic growth in FY25 amid weak farm and industrial outlook
KARACHI: Pakistan's economy is expected to grow 2.7 percent in the outgoing fiscal year, missing the government's 3.7 percent target due to what analysts called weaker-than-expected performance in the agriculture and industrial sectors, as Finance Minister Muhammad Aurangzeb unveiled the annual Economic Survey on Monday. The survey, released ahead of the national budget on June 10, serves as a pre-budget document assessing the economy's trajectory over the past year. It outlines key indicators and policy challenges facing the country, which remains under an International Monetary Fund (IMF) program and is navigating a fragile recovery after a prolonged financial crisis. 'This has been a gradual recovery,' Aurangzeb told a televised news briefing in Islamabad, adding that the country's economic performance must be viewed in the larger global context. The finance minister said after contracting by 0.2 percent in FY23, Pakistan's economy grew 2.5 percent last year and is expected to expand slightly to 2.7 percent in the outgoing year. 'We plan to stay the course to ensure that we remain on the sustainable growth trajectory,' he added. Aurangzeb reaffirmed the government's commitment to implementing IMF-backed structural reforms to transform the fundamentals of Pakistan's economy. 'The DNA of Pakistan's economy has to be fundamentally changed through tax and energy reforms that have started showing remarkable results,' he said. The minister maintained staying in the IMF program would help Pakistan bring permanence to its hard-earned macroeconomic stability and reduce its economic vulnerability. 'Implementing a 37-month, US$7 billion IMF Extended Fund Facility (IMFEFF) has bolstered policy credibility and provided essential financial support to promote inclusive and reform-driven growth,' the Economic Survey also proclaimed. Analysts said Pakistan targeted 3.7 percent economic growth for the outgoing fiscal year but was forced to revise it to 2.7 percent last month due to underperformance in the agriculture sector. 'The government did fall short of its 3.7 percent GDP growth target for FY25 and primarily it was due to a major setback in the agriculture sector,' said Sana Tawfik, head of research at Arif Habib Limited. 'The agriculture sector posted a growth of just 0.6 percent so the situation was especially concerning in major crops,' she added. According to the survey, the agriculture sector is expected to grow by 0.56 percent, while the industrial and services sectors are likely to expand by 4.77 percent and 2.91 percent, respectively. Meanwhile, inflation has eased significantly, giving room for monetary easing. Aurangzeb called the inflation trend a 'fantastic story' for Pakistan, with the pace of price hikes slowing to a record low of 0.3 percent in April. Inflation is expected to settle at 4.3 percent in the outgoing financial year. The State Bank of Pakistan also cut its benchmark interest rate by over 1,000 basis points to 11 percent in FY25, with more easing likely ahead. 'This is the domain of the State Bank and the monetary policy committee so I don't want to comment on that,' Aurangzeb said. 'But I do expect where our core inflation is, where headline inflation is, there is room to do more.' On the fiscal side, the survey showed that the government managed to contain the deficit at 2.6 percent of GDP for July-March, compared with 3.7 percent during the same period a year ago. Revenues rose sharply, with tax collections increasing by 26.3 percent to Rs9.3 trillion ($32.9 billion), while total revenues stood at Rs13.4 trillion ($47.5 billion). Primary surplus also improved to 3.0 percent from 1.5 percent. Government expenditure during this period rose to Rs16.3 trillion ($58 billion), with current and development spending increasing by 18.3 percent and 33 percent, respectively. On the external front, Pakistan recorded a sharp turnaround in its current account, moving from a $1.3 billion deficit to a $1.9 billion surplus, driven by improved exports and record remittance inflows. 'The industry also struggled. If you look at the manufacturing sub-sector so LSM [large scale manufacturing] remained in the negative territory,' said Tawfik, noting that weak domestic demand, high inflation and elevated interest rates had weighed on performance. 'In short both demand and supply side factors combined dragged down the overall growth across key sectors of the economy,' she continued. Aurangzeb said the government was working to further reduce energy costs for local investors. 'On the energy side, as I said one-third of the tariffs, seven rupee is not a small amount and Mr. Leghari [power minister] is working on it day in and day out,' he said. Planning Minister Ahsan Iqbal last week said the government was targeting 4.2 percent growth in the next fiscal year starting July. Aurangzeb echoed this target, noting that growth would be driven by a rebound in agriculture and industry. 'This target would be achieved through growth in industries and agriculture that are expected to rebound on the back of government's favorable financial, tax and energy policies,' he said. Pakistan's multilateral and bilateral partners, including the IMF, World Bank, China, Saudi Arabia and the United Arab Emirates, remain supportive of the country's reform path. 'With respect to the Fund and multilateral partners I've already mentioned we are in a good place with them both in terms of the mission and the senior management of the Fund,' Aurangzeb said. 'The monetary institutions and our bilateral partners are standing by us as we move forward.' Shankar Talreja, an economist and director at Topline Research Ltd., expressed optimism about the outlook. 'There will be some natural rebound in important crops under the agriculture segment,' he said. 'Similarly, due to lower interest rates, industrial and services sectors will also post decent growth.'
Free Malaysia Today
04-06-2025
- Business
- Free Malaysia Today
OECD urges M'sia to boost competitiveness amid global uncertainty
OECD said Malaysia could attract more investment by easing restrictions on FDI and promoting fair competition between state-owned enterprises, GLCs and private firms. (Envato Elements pic) KUALA LUMPUR : The Organisation for Economic Cooperation and Development (OECD) has called on Malaysia to take further steps to improve its economic competitiveness and resilience in light of global uncertainties. Speaking at a virtual conference on the OECD Economic Outlook today, its Southeast Asia division head, Jens Arnold, said Malaysia should pursue additional reforms to strengthen its economy. Recent reports suggest the US is proposing a 'revenge tax' targeting what it sees as unfair tax practices. The measure would affect passive income from US investments and profits of foreign-owned entities, including governments, companies and foundations. Arnold said Malaysia could attract more investment by easing remaining restrictions on foreign direct investment (FDI) and promoting fair competition between state-owned enterprises, GLCs and private firms. 'Malaysia has some room for monetary support, as inflation remains low and well contained. But, more importantly, structural reforms are needed to strengthen competitiveness,' he said. He stressed the need to address labour market challenges, such as skills mismatches, through better education and workforce training. 'These steps are crucial to making the economy more resilient to future shocks,' he said. OECD chief economist Alvaro Pereira projected Malaysia's economy to grow by 3.8% in 2025, down from stronger export performance in 2024, as global trade slows. He said inflation, which stood at 1.8% in 2024, was expected to rise to 2.2% in 2025 and 2.7% in 2026. 'Malaysia's labour market is strong, with unemployment at a 10-year low and rising labour force participation. This should continue to support private consumption,' he said. He noted that monetary policy remained broadly neutral and appropriate, but there was room to ease if growth slowed. However, he warned that authorities must watch for potential inflationary pressures from a tight labour market and rising wages. Southeast Asian outlook remains uncertain Arnold said that in 2024, Indonesia, Malaysia, the Philippines, Thailand and Vietnam grew at a weighted average of 5%, comparable to or higher than growth in the OECD area and China. However, he warned that trade and investment could weaken this year because of tariffs and rising policy uncertainty, with early signs of slowing activity seen in purchasing manager indices. He said boosting competition could improve productivity, especially by reducing regulatory barriers for new and foreign businesses. 'These five Southeast Asian economies remain more restrictive than many others. Lowering barriers to FDI and services would help improve the competitiveness of local industries,' he said.
Zawya
04-06-2025
- Business
- Zawya
IMF commends ‘strong momentum' of structural reforms in Oman
Muscat – International Monetary Fund (IMF) has commended Oman for its ongoing implementation of structural reforms and continued economic growth, despite a contraction in hydrocarbon output resulting from OPEC+ oil production cuts. An IMF staff team, led by César Serra, visited Muscat from May 21 to 29 to review economic and financial developments, assess outlook and discuss the country's policy priorities. 'The momentum of structural reforms remains strong, supporting Oman's ability to navigate a challenging external environment and accelerate economic diversification,' Serra said in a statement released at the end of the IMF mission. IMF noted that Oman's economy continues to expand, driven by sustained investment in logistics, manufacturing, renewable energy and tourism, while inflation remains low. 'Despite a contraction in hydrocarbon output due to ongoing OPEC+ oil production cuts, real GDP growth strengthened to 1.7% in 2024, up from 1.2% in 2023, supported by robust non-hydrocarbon activity, particularly in manufacturing and services,' Serra said. According to IMF, Oman's economy is expected to expand at a faster pace over the medium term, with overall GDP growth projected at 2.4% in 2025 and 3.7% in 2026. 'This improved performance is expected to be driven by the gradual phasing out of OPEC+ production limits and continued strong non-hydrocarbon growth, underpinned by sustained investments in key sectors,' Serra said. However, he added that lower oil prices are likely to weigh on Oman's fiscal and external positions. 'Following a fiscal surplus of 3.3% of GDP in 2024, the surplus is projected to narrow to an average of 0.5% of GDP during 2025–2026, before improving over the medium term. This recovery will be supported by resumption of oil production and continuation of fiscal reforms.' IMF acknowledged further reductions in Oman's public debt, which declined to 35.5% of GDP in 2024, down from 37.5% in 2023, as the government continued to allocate part of its fiscal surplus towards debt repayment. State-owned enterprise (SOE) debt was also reduced to around 31% of GDP, supported by steady progress on the SOE reform agenda led by Oman Investment Authority. 'Structural reforms are progressing well,' Serra said. 'Oman Tax Authority is making steady progress with its Tax Administration Modernisation Programme, Central Bank of Oman is further refining its liquidity management framework and the financial sector reform agenda continues with several initiatives aimed at expanding access to finance.' He noted that SOE reforms are yielding tangible improvements in governance, profitability and risk management. Limited impact of global trade tensions IMF expects the direct impact of global trade tensions on Oman to be limited. However, lower oil prices and the risk of slower growth among key trading partners may weigh on the economic outlook. 'Risks to the outlook are tilted to the downside. While the direct effects of global trade tensions are likely to be limited – given Oman's modest exports to the United States – indirect effects could be more pronounced. On the upside, accelerated reform implementation under Oman Vision 2040 would strengthen the country's outlook,' Serra said. Commenting on the banking sector, he added, 'It remains sound, supported by strong asset quality, healthy capital and liquidity buffers, and sustained profitability. Banks maintain a positive net foreign asset position, while private sector credit growth remains strong, supported by an expanding deposit base.' © Apex Press and Publishing Provided by SyndiGate Media Inc. (
