Pakistan Set for Higher Inflation than Bankrupt Sri Lanka this Year

The average inflation in Pakistan during the current fiscal year (FY23) is set to be higher than in Sri Lanka, according to the Asian Development Bank. The bank in its latest report, “Asian Development Outlook (ADO) April 2023”, said that inflation is expected to remain high in South Asia, driven by Pakistan and Sri Lanka. According to the report, South Asia’s inflation rate is expected to decline to only 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. Inflation in Sri Lanka is forecast 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 expected to fall sharply to 5.5 percent in 2024 as further tightening helps reanchor inflation expectations. However, the bank said 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.