3pc GDP growth, reduction in inflation & policy rates projected

ISLAMABAD: The Sustainable Development Policy Institute (SDPI), while appreciating the country’s economic progress in 2024, Monday, said that the year has been a year of economic stabilisation and recovery as negative GDP growth, heightened policy and inflation rates had transitioned to positive indicators showing reviving growth trajectory.

The SDPI Executive Director (ED), Dr Abid Qaiyum Suleri, while talking on the overall economic situation of the country during the year at a seminar on Pakistan’s Economic Outlook for 2024, acknowledged the substantial progress made in 2024, citing a projected three percent GDP growth, a tripling of foreign reserves to $12.25 billion, and a significant reduction in inflation and policy rates.

He also pointed out that 2025 would be a crucial year, hinging on IMF programme commitments, tax reforms, climate change management, and political stability. “Economy in 2025 will depend on a combination of factors, including Pakistan’s relationship with the IMF, USA, and China; climate resilience efforts, political stability, and investment in human development,” Suleri said.

“The revival of political negotiations is a beacon of hope,” he said, noting the positive impact of improved relations between the government and opposition. Dr Suleri noted the importance of improved administrative control to manage inflation, citing the lack of regulation in sugar mills and poor stock management.

As Pakistan navigates a challenging yet promising economic landscape, Dr Suleri agreed that while stabilisation has been achieved, significant reforms and strategic planning would be essential for sustainable growth in 2025 and beyond.

Dr Shafqat Munir, deputy executive director at SDPI, opened the session by highlighting the government’s growing confidence in Pakistan’s economic recovery. Referring to a recent press conference by the finance minister, Dr Munir noted the optimistic economic indicators, signalling a potential turnaround after a challenging 2023.

Dr Khaqan Hassan Najeeb, a senior economist stressed that Pakistan’s economic recovery was only the third time in the last decade that the country had turned to the IMF for assistance. He emphasised the need for urgent reforms in taxation, agriculture productivity, and fiscal expenditure, warning that without substantial restructuring, Pakistan’s growth rate would remain below one per cent. Dr Najeeb also called for improved economic diplomacy, particularly with China, to unlock potential investment avenues.

Dr Fareeha Armughan, another SDPI expert, highlighted the government’s substantial increase in social protection allocations, marking a historic high of Rs594 billion. However, she pointed out that critical sector such as education and institutional governance remain under-funded and mismanaged. According to Dr Armughan, aligning fiscal decisions with climate change and disaster risk reduction policies was crucial for long-term stability.

Dr Sajid Amin Javed, deputy executive director at SDPI, concluded the session by noting the decline in inflation rates and rupee stabilisation. However, he emphasised that the government must remain cautious and proactive in 2025, particularly, in energy inflation and employment targets. He warned that despite improvements, the economic foundation remains weak and needs stronger administrative measures, especially in sectors such as agriculture and IT.

Copyright Business Recorder, 2024