According to the Asian Development Bank’s latest report, “Asian Development Outlook (ADO) April 2023,” the average inflation in Pakistan during the current fiscal year (FY23) is expected to be higher than that of Sri Lanka.
The report notes that inflation is expected to remain high in South Asia, primarily due to Pakistan and Sri Lanka.While the inflation rate in South Asia is expected to decrease to 8.1 percent this year from 8.2 percent in 2022, with India accounting for most of the decrease, headline inflation in India is expected to slow to 5 percent this year and 4.5 percent in 2024.
On the other hand, Sri Lanka’s inflation is forecasted at 24.6 percent, a decline from 46.4 percent last year, as fiscal and monetary tightening weighs on domestic demand. Sri Lanka’s inflation is anticipated to fall sharply to 5.5 percent in 2024 as further tightening helps reanchor inflation expectations.
However, the report indicates that inflation is expected to accelerate in Pakistan to 27.5 percent this year and 15.0 percent next year, up from 12.2 percent in 2022. This is a cause for concern as higher inflation can have adverse effects on the country’s economy and the well-being of its citizens.
The increase in inflation in Pakistan is attributed to various factors, including rising oil prices, higher food prices, and the devaluation of the Pakistani rupee. The country’s fiscal and monetary policies also play a crucial role in determining the inflation rate.
The Asian Development Bank’s report highlights the challenges faced by South Asia in managing inflation, with Pakistan expected to experience higher inflation rates than bankrupt Sri Lanka. The report emphasizes the need for policymakers to adopt measures to address inflationary pressures and stabilize the economies of the region