Islamabad

The World Bank on Tuesday slashed Pakistan's economic growth by half - from 4 per cent to 2 per cent for the current fiscal year, saying that Islamabad faces mounting economic difficulties.

"Nonetheless, Pakistan faces mounting economic difficulties and Sri Lanka remains in crisis. In all regions, improvements in living standards over the half-decade to 2024 are expected to be slower than from 2010-19," read the World Bank in Global Economic Prospects report.

Pakistan's economic condition is precarious with low foreign exchange reserves and large fiscal and current account deficits, has further worsened by severe flooding.

About one-third of the country's land area was affected, damaging infrastructure, and directly affecting about 15 percent of the population.

Moreover, Pakistan, with low foreign exchange reserves and rising sovereign risk, saw its currency depreciate by 14 per cent between June and December and its country risk premium rise by 15 percentage points over this same period.

Pakistan's consumer price inflation reached 24.5 per cent in December on an annual basis, recently coming off its highest rate since the 1970s.

ALSO READ: India on path of reform, transform and perform: Prime Minister Narendra Modi

This is mainly due to weak growth in Pakistan, which is projected at 2 per cent in FY2022/23, half the pace that was anticipated last June.