The International Monetary Fund (IMF) has adjusted Pakistan’s economic growth forecast to 0.5% while significantly raising inflation predictions to over 20% for the next two years.
This implies that high-interest rates and hardships for citizens will persist.
The IMF’s World Economic Outlook report also revealed a marginal reduction in Pakistan’s current account deficit (CAD) projections for this fiscal year. However, the revised figure of 2.3% of GDP seems unrealistic.
The report indicates that Pakistan’s GDP growth rate has been revised downward for the fiscal years 2022-23 and 2023-24, with inflation forecasts, adjusted upwards to reflect the harsh economic conditions. Inflation in Pakistan has surged due to currency devaluation, new taxes, and increased costs for electricity, gas, and essential goods, all of which are mainly domestic factors.
Pakistan’s GDP growth forecast has been reduced from 3.5% to 0.5% for this fiscal year, aligning with projections from the World Bank and Asian Development Bank. The IMF also lowered its economic growth forecast for the next fiscal year from 4.2% to 3.5%. Pakistan needs a 7% to 8% growth rate for the next two decades to accommodate its growing population. Still, successive governments have relied on borrowing rather than increasing savings, resulting in recurring economic crises.
The IMF report also predicts an increase in Pakistan’s unemployment rate from 6.2% to 7% this fiscal year. Last week, the World Bank estimated that approximately 3.9 million additional Pakistanis would fall into poverty due to various economic shocks.
