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Pakistan Forecasts Economic Growth to Halve Following Floods

·1 min read

(Bloomberg) -- Pakistan’s government slashed its economic growth projections by more than half compared to its previous estimate after flooding inundated a third of the country.

The floods have made previous projections irrelevant and economic growth is estimated at 2.3% now, according to initial calculations by the Ministry of Planning Development and Special Initiatives. The government had set a target of 5% growth in June.

Pakistan’s economy was passing through multiple economic challenges and “the devastation to the floods have further intensified the crisis,” said the note.

The South Asian nation is facing a climate crisis even as it resumed a $6.5 billion loan program with the International Monetary Fund easing fears of a default. Millions of acres of agricultural land were flooded after the highest rainfall in decades.

In Sindh province, the entire cotton crop, as well as 65% of the region’s rice output have been wiped out, according to Finance Minister Miftah Ismail. The country’s biggest producer of steel bars Amreli Steels Ltd. and largest tractor factory Millat Tractors Ltd. have suspended operations.

The nation’s economic growth has already seen a slowdown even as inflation accelerates to the highest in almost five decades, prompting the central bank to raise interest rates by 525 basis points this year. It has also raised energy prices by 50% to win the IMF bailout.

More stories like this are available on bloomberg.com

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