ISLAMABAD: The International Monetary Fund (IMF) has projected the GDP growth rate for Pakistan at two per cent for the current fiscal year compared to -0.2 per cent in the fiscal year 2023. It also projected a decline in inflation, ie, from 29.2 per cent to 24.8 per cent and unemployment from 8.5 per cent to eight per cent.
The fund in its latest report, “World Economic Outlook (WEO): Steady but Slow: Resilience amid Divergence” released on Tuesday noted that Pakistan’s GDP is projected to be 3.5 per cent in the fiscal year 2025.
The Fund has also revised downward the inflation rate projection to 24.8per cent for the current fiscal year and 12.7 per cent in fiscal year 2025 against 29.2per cent in fiscal year 2023.
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The unemployment in the country is projected to decrease to eight per cent in 2024 against 8.5 per cent in 2023, which is projected to be 7.5 per cent in 2025.
The current account balance is projected at negative 1.1 per cent for 2024 compared to negative 0.7 per cent in 2023 and projected negative 1.2 per cent for 2025.
The report noted that the baseline forecast is for the world economy to continue growing at 3.2 per cent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies—where growth is expected to rise from 1.6 per cent in 2023 to 1.7 per cent in 2024 and 1.8 per cent in 2025—will be offset by a modest slowdown in emerging market and developing economies from 4.3 per cent in 2023 to 4.2 per cent in both 2024 and 2025.
The forecast for global growth five years from now—at 3.1 per cent—is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 per cent in 2023 to 5.9 per cent in 2024 and 4.5 per cent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually.
Economic activity was surprisingly resilient through the global disinflation of 2022–23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession.
Growth in employment and incomes held steady, reflecting supportive demand developments–– including greater-than-expected government spending and household consumption—and a supply-side expansion amid, notably, an unanticipated boost to labour force participation. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic.
As inflation converges toward target levels and central banks pivot toward policy easing in many economies, a tightening of fiscal policies aimed at curbing high government debt, with higher taxes and lower government spending, is expected to weigh on growth.
Copyright Business Recorder, 2024
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