ISLAMABAD: Pakistan expects its economy to grow by around 3.5% in the current financial year despite widespread flood damage to crops and farmland, Finance Minister Muhammad Aurangzeb said in an interview to a Chinese media outlet on Tuesday.

Ranked among the world’s most climate-vulnerable countries, Pakistan witnessed yet another devastating monsoon this year that led to massive flooding, killing more than 1,000 people and 22,000 livestock while washing away crops spread over 2.2 million acres since late June.

The country’s agricultural heartland of Punjab was the worst hit after India released excess floodwaters that triggered a catastrophic deluge in late August. The situation affected more than 4.5 million people and forced the provincial administration to evacuate over 2.6 million from high-risk areas.

“We grew at 3% GDP last year,” Aurangzeb told China’s CGTN news channel. “We had estimated growth a little over 4% this year, but given the flood situation, this will shave off a certain percentage. Still, I’m quite hopeful that we can manage anything close to 3.5% during this fiscal year.”

The minister said Pakistan’s broader economy was on a recovery path, with inflation easing, foreign exchange reserves improving and international rating agencies restoring confidence in the country’s financial direction.

“It’s after a hiatus of two and a half to three years that we have alignment between the rating agencies,” Aurangzeb said, referring to upgrades from Fitch, S&P and Moody’s earlier this year.

He acknowledged that privatization had long remained a challenge but pointed to recent progress while referring to the sale of the First Women’s Bank to a United Arab Emirates conglomerate.

Aurangzeb called it “a small bank” but noted it had been on the privatization list for a long time.

He added that Pakistan International Airlines was next in line.

“We are very sanguine that before the year is out, that’s going to be privatized as well,” he said.

The finance minister acknowledged the China-Pakistan economic ties had been vital for his country’s prosperity, saying the two countries were now pivoting from infrastructure development to industrialization.