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International Monetary Fund (IMF) has projected a sharp decline in GDP growth rate for Pakistan from 5.2 percent in 2018 to 2.9 percent in 2019 and a further decline to 2.8 in 2020, and projected sharp rise in inflation from 3.9 percent in 2018 to 7.6 percent in 2019.
IMF in its latest report "World Economic Outlook (WEO), Growth Slowdown, Precarious Recovery" states that in the absence of further adjustment policies in Pakistan, growth is projected to remain subdued at about 2.5 percent, with continued external and fiscal imbalances weighing on confidence. The World Bank (WB) has revised GDP growth rate projection to 3.4 percent for fiscal year 2019 and to 2.7 percent for 2020 and upward, the inflation rate to 7.1 percent for fiscal year 2019 and 13.5 percent for fiscal year 2020. Asian Development Bank (ADB) has also revised the GDP growth rate projection downward to 3.4 percent for 2019 and 3.6 percent for 2020 and inflation rate at 7.5 percent for 2019 and 7 percent for fiscal year 2020.
The IMF report has projected the same unemployment ratio for Pakistan at 6.1 percent in 2019 as in the previous year 2018, but projected a slight increase and projected at 6.2 percent for 2020. The current account balance is forecast at negative 5.2 percent and negative 4.3 percent for 2019 and 2020, respectively, against negative 6.1 percent in 2018. The report further states that growth in the Middle East, North Africa, Afghanistan, and Pakistan region is expected to decline to 1.5 percent in 2019, before recovering to about 3.2 percent in 2020.
The outlook for the region is weighed down by multiple factors, including slower oil GDP growth in Saudi Arabia, ongoing macroeconomic adjustment challenges in Pakistan, US sanctions in Iran, and civil tensions and conflict across several other economies, including Iraq, Syria, and Yemen, where recovery from the collapse associated with the war is now expected to be slower than previously anticipated.
The medium-term outlook for the Middle East, North Africa, Afghanistan, and Pakistan region is largely shaped by the outlook for fuel prices, needed adjustment to correct macroeconomic imbalances in certain economies, and geopolitical tensions.
Convergence prospects are bleak for some emerging market and developing economies. Across sub-Saharan Africa and the Middle East, North Africa, Afghanistan, and Pakistan region, 41 economies, accounting for close to 10 percent of global GDP in purchasing-power-parity terms and close to 1 billion in population, are projected to grow by less than advanced economies in per capita terms over the next five years, implying that their income levels are set to fall further behind those economies
Symmetrically, the current account deficits of some Asian net oil importers (such as India, Indonesia, and Pakistan) have widened, reflecting their higher oil import bills. Among major current account surplus and deficit countries and regions, the current account surplus of China declined considerably, to 0.4 percent of GDP, while the US current account deficit was unchanged at 2.3 percent, and the surplus of the euro area declined marginally to 3.0 percent.

Copyright Business Recorder, 2019