Finance Minister Muhammad Aurangzeb said that the recent floods, which inundated large swathes of agricultural land in the country, is likely to hit Pakistan’s economic growth this year.
In an interview with Bloomberg News in Washington on Thursday, Aurangzeb shared that the government’s initial assessments showed damage to the country’s rice and cotton sectors, while a more detailed damage assessment will take place in the coming months.
“This will put in a dent to our GDP growth number,” he said. “My own view is it will still be north of 3.5%, early days, but anywhere between 3.5 to 4%.”
“Climate change for us is not academic,” Aurangzeb said. “We are living it, and the recent floods actually are a reflection of that.”
Heavy monsoon rains beginning in late June devastated farmland in Pakistan, killing hundreds while displacing more than 4 million people.
The State Bank of Pakistan (SBP) on Thursday warned that flood-induced losses to the country’s agriculture sector and post-flood infrastructure spending may widen trade and current account deficits, accelerate inflation readings, and restrict economic growth to around 3.25% in the ongoing fiscal year 2025-26.
“The flood-induced losses to agriculture and infrastructure [spending] are likely to have upside risks for the projection of twin deficits and inflation outlook, while downside risks for growth,” SBP said in a brief on economic outlook in its Annual Report 2024-25 on the State of Pakistan Economy.
Meanwhile, the International Monetary Fund (IMF) estimates the country’s economy will grow between 3.25% and 3.5% in the fiscal year to June despite the destructive monsoon rains.
According to Bloomberg, Pakistan and the US have moved to rebuild military and economic ties after years of strain.
“Economic links have grown with a trade deal that levied a 19% tariff on Pakistani goods, lower than regional peers and well below the 50% tariff on rival India,” it said.
Aurangzeb informed the US media outlet that Pakistan plans to issue its inaugural tranche of yuan-denominated debt — known as Panda bonds — by late November or early December.
“The $250 million issue is key to diversifying the country’s funding channels,” he said.
“We have tapped the US dollar market, we have done euros, we have done Islamic sukuk, but we had not accessed the second largest, the second deepest capital market in the world,” he said.
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