ISLAMABAD: Pakistan`s economic growth will be 5.2 per cent during the outgoing fiscal year ending June 2017, says a World Bank report released on Monday, adding `the growth remains strong over the forecast horizon, reflecting an upturn in private investment, increased energy supply, and improved security` In its forecast summary for South Asia contained in the 2017 Global Economic Prospects report, the World Bank projects that economic growth in Pakistan would be 5.5pc in 2017-18 and 5.8pc in fiscal years up to 2019-20. The fiscal deficit should narrow further as a result of revenue-led fiscal consolidation, says the report.

In Pakistan, favourable weather and increased cotton prices are supporting agricultural production, and the China-Pakistan Economic Corridor (CPEC) infrastructure project as well as a stable macroeconomic environment is contributing to an increase in private investment, it says.

The forecast for South Asia assumes that monetary policy across the regional countries remains broadly accommodative, encouraging credit to the private sector; that fiscal policy tightens slightly to curb the increase in public debt; and that political tensions and insecurity abate.

The report says the regional growth is forecast to increase to 6.8pc and to strengthen to an average of 7.2pc in 2018-19, reflecting a solid expansion of domestic demand and exports.

Excluding India, regional growth will remain broadly stable at an average of 5.8pc in 2017-19, an easing growth in Bangladesh and Nepal offset gains in Bhutan, Pakistan and Sri Lanka.

The World Bank report however cautioned that a number of downside risks continue to cloud the outlook for the region. Setbacks to the assumed pace of structural reforms would impede the unlocking of supply constraints, dampen productivity growth, and hold up integration into global value chains.

For several countries in the region, increased political or geopolitical tensions could pose major obstacles to economic and financial activity.

Upcoming elections in Nepal (between 2017 and 2019), Bangladesh and Pakistan (2018) and in India (2019) could be accompanied by heightened policy uncertainty, and election results could surprise financial markets.Compared to other emerging markets and developing economies (EMDE) regions, South Asia is less integrated into the global economy and, therefore would be less affected by the materialisation of a range of negative externalshocks.

However, two external risks remain a concern. First weaker-thanexpected recovery in external demand, or a widespread increase in trade protectionism in advanced economies, could weigh on exports.

Second, the outlook for remittances is uncertain. The main risks would be from tighter immigration policies in advanced economies, especially in the United States and the United Kingdom, and continued fiscal con-solidation in oil-exporting Gulf Cooperation Council (GCC) countries.

Any substantial decline in remittances would dampen consumption and investment in major recipients in Bangladesh and Nepal.

Finally, changing environmental patterns in South Asia pose growing risks.

The number of people affected from extreme weather events has increased substantially in recent years.

Natural disasters from extreme weather conditions often adversely affect agricultural output in the region, as recently experienced in India, Pakistan and Sri Lanka.