ISLAMABAD The global economic downturn is likely to undercut Pakistans growth, with the gross domestic product slowdown, projected to 2.8 per cent in 2009, before rebounding to four per cent, projected in 2010, the Asian Development Bank (ADB) says in a report. ADBs flagship annual economic publication, Asian Development Outlook 2009 (ADO 2009), released Tuesday, stressed that structural weaknesses of the economy need to be overcome to avoid boom-bust cycles and reduce dependence on external inflows. In 2008, a sharp deterioration in current account and fiscal balances, amid escalating inflation, led to the depletion of foreign reserves. The immediate threat to economic stability needs to be overcome by a stabilisation programme backed by the International Monetary Fund (IMF). Beyond the immediate fiscal and monetary steps, the country needs a long-term strategy and action plan to transform, upgrade, and diversify the economy, particularly the manufacturing sector. This is critical to sustain growth and generate jobs. Strengthening the economic fundamentals, addressing the power and infrastructure gaps and improving human development indicators are key components of a medium-term strategy to accelerate the process of structural change in the country. While reducing large imbalances is important, a responsive fiscal stance that addresses the need for building critical infrastructure and investing in health and education is also needed. South Asia, as a region, will remain vulnerable to balance of payments pressure in the current international environment. Countries such as Bangladesh, Pakistan, Nepal and Sri Lanka, and the Maldives all rely heavily on workers remittance to offset large trade deficits while their exports are concentrated in garments and textiles. These sources of foreign exchange may emerge as constraints in the period ahead. ADB , based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members, 48 from the region. In 2008, it approved $10.5 billion as loans, $811.4 million as grant projects and technical assistance amounting to $274.5 million.