Pakistan’s real GDP growth rate is expected to clock in at 2% in 2024 and inch up marginally to 2.3% in 2025, a United Nations economic survey projected.
As per the report titled ‘Economic and Social Survey of Asia and the Pacific 2024: Boosting Affordable and Longer-term Financing for Governments’ released on Thursday, inflation rate in Pakistan is expected to hover at 26% and is projected to lower considerably to 12.2% in 2025.
The report noted that in 2023, the economy of Pakistan faced political unrest that had adverse impacts on business and consumer sentiment while a massive flood disrupted agricultural production.
It added that amid fiscal pressure across the region, countries such as Pakistan and Sri Lanka resorted to external assistance from the International Monetary Fund (IMF).
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“In the case of Pakistan, the country secured an IMF agreement in mid-2023 which would help, with further assistance from such bilateral partners as China, Saudi Arabia and the United Arab Emirates,” it added.
“Essentially, both economies are undergoing fiscal adjustments to restore fiscal sustainability through the use of various measures, such as restructuring domestic debt in Sri Lanka and removing subsidies for the power sector in Pakistan,” the report added.
The report further highlighted that despite low tax levels, tax gaps in Bangladesh, Pakistan and Sri Lanka are moderate, although such gaps are not necessarily small if measured as a share of current tax revenues rather than as a share of GDP.
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“This suggests that better tax policies and administration alone may not help to bridge the vast development financing gaps in low tax countries. Overall improvements in socioeconomic development and public governance would be needed as well as tax revenue enhancement on a larger scale,” read the report.
The UN report said that macroeconomic conditions in the developing Asia-Pacific region continue to remain challenging, despite higher GDP growth and moderating inflation.
“Average economic growth in the region picked up from 3.5% in 2022 to 4.8% in 2023; however, the rebound was concentrated in only a few large economies.
“In other developing Asia-Pacific economies, economic growth remained moderate in 2023,” it noted.
Pakistan recorded a modest 1% GDP growth rate in the second quarter (October-December) of fiscal year 2023-24, official estimates suggested. The number was below expectations as earlier projections had put the number in the range of 2-3%.
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