Jawad Ahmed ISLAMABAD, April 14 (INP WealthPK): The current fiscal year is predicted to see an increase in inflation, reflecting higher international energy prices, significant currency depreciation, and elevated global food prices due to supply disruptions. The average inflation is expected to increase by 11% in FY2022, the Asian Development Bank (ADB) reported. The rise in global oil and natural gas prices is a key factor to growing inflation in Pakistan since these commodities account for 20% of the country's entire import bill. “Pakistan will continue experiencing strong inflationary pressure for the rest of the current fiscal year from the jump in global fuel prices,” the ADB said. The report highlighted that a prolonged Russia-Ukraine conflict might boost wheat prices and fuel higher food inflation, as Ukraine is a major source of wheat imports for Pakistan. According to the report seen by WealthPK, headline inflation fell to 8.9% in FY2021 from 10.7% in FY2020, owing to better perishable food supplies, decreased domestic fuel prices, and local currency appreciation. During the first eight months of FY2022, the headline inflation increased to 10.5%, and it is predicted to rise at 11% by the end of the current fiscal. In addition, the central bank tightened monetary policy in response to rising inflation and fast-growing external imbalances in the second quarter of FY2022 are likely to curb the inflationary pressure in FY2023, ADB added. [caption id="attachment_66023" align="aligncenter" width="696"] Asian Development Bank (ADB)/WealthPK Research[/caption] Furthermore, the tightened fiscal and monetary policy will continue to hurt the industrial sector growth, as large manufacturing, which accounts for over half of industry, has weakened since September 2021, with growth slowing to 3.5% in the first five months of FY2022 from 6.9% in the same period of FY2021. The downturn in the manufacturing sector, along with the government's stabilization program, is projected to limit the services sector's expansion, the ADB said. Due to stricter fiscal and monetary policies and the repercussions from the Russia-Ukraine conflict, the ADB expects Pakistan's GDP (gross domestic product) growth to decrease to 4% in FY2022 from 5.6% in FY2021. Moreover, the GDP growth is expected to rise to 4.5% in FY2023 with expected stronger private consumption and investment, as key structural reforms and greater macroeconomic stability boost household and business confidence. According to the report, remittances are projected to remain buoyant, supported by the Roshan Digital Account initiative and the recovery in the global economy, providing a major source of foreign currency inflows ($15.8 billion in the first six months of FY2022). Current account deficit is projected to narrow to 3% of GDP in FY2023 as stabilized commodity prices and continued fiscal consolidation slow import growth.