UN projects 2% growth in Pakistan in 2024

The United Nations (UN) expects “modest economic growth” of 2% in Pakistan in 2024, which is expected to improve to 2.4% in 2025.

The projections were made by the UN in its latest report titled 'World Economic Situation and Prospects (WESP) 2024', released on Friday.

“In Sri Lanka and Pakistan, modest economic growth is expected, with GDP projected to expand by 1.5% in the former and 2% in the latter in 2024,” read the report.

As per the report, Pakistan's economy registered a growth of 1.7% in 2023.

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The report added that growth in South Asia is projected to remain robust at 5.2% in 2024, slightly lower than the 5.3% growth estimated for 2023. “However, the effects of higher interest rates will continue to weigh on investment, and weaker global demand will lead to slower export growth,” read the report.

“Tight financial conditions and fiscal and external imbalances will continue to weigh on growth in South Asia in the near term. In addition, geopolitical tensions – including the ongoing war in Ukraine and the conflict in Western Asia – will expose net-oil-importing countries in the region,” it said.

Meanwhile, as per the report, global economic growth is projected to slow from an estimated 2.7% per cent in 2023 to 2.4% in 2024, trending below the pre-pandemic growth rate of 3.0%.

The report noted that climate-change-related events continued to hurt the region in 2023.

“Droughts intensified considerably during July and August, affecting most of India, Nepal and Bangladesh, while Pakistan recorded above-average rainfall,” it said.

“These shocks are expected to be disproportionately severe in countries where agriculture accounts for the largest share of GDP. Damage to key crops will most likely lead to further increases in food prices, intensifying food insecurity pressures across the region, particularly in those countries already facing high levels of food,” it said.

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The report highlighted that in June 2023, Pakistan entered into a Stand-by Arrangement with the IMF worth $3 billion.

“The IMF programme is expected to help stabilize the economy, increase the country’s foreign exchange reserves, and facilitate fiscal adjustment while also protecting crucial social spending,” read the report.

The report projected inflation rate in Pakistan to move downwards in the coming years. It noted that the consumer price index (CPI) based inflation in the South Asian country clocked in at 30.3% in 2023, which is projected to decrease to 19.1% in 2024 and 10.4% in 2025.

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Meanwhile, global inflation is projected to decline further, from an estimated 5.7% cent in 2023 to 3.9% in 2024. “Price pressures are, however, still elevated in many countries and any further escalation of geopolitical conflicts risks renewed increases in inflation,” it said.