Central bank blames falling productivity for weak growth

While anticipating an improvement in the overall outlook with economic activities picking up momentum in the second half, the State Bank of Pakistan (SBP) maintained its real GDP growth forecast on Monday at 2.5-3.5 per cent for FY25. The International Monetary Fund (IMF) has revised the growth to 2.6pc from 3pc, and the World Bank to 2.7pc for the current fiscal year. “One of the prominent challenges long undermining the sustainability of growth is low and falling productivity that has adversely affected the country’s economic competitiveness,” the central bank noted in its half-yearly report, ‘The State of Pakistan’s Economy’. It added that this is particularly evidenced by Pakistan’s lowest GDP per worker among the peer countries. The country’s weak productivity growth has contributed to the frequent balance of payments crises, with the economy stuck in a recurring boom-bust cycle.