The IMF has decided to maintain Pakistan’s economic growth forecast at 2.5%. This figure aligns with both official projections and the IMF’s previous report but falls short of the government’s target by 1%. Unlike Pakistan’s claim of 0.3% GDP growth for the previous year, the new IMF report suggests an economic contraction of 0.5% during the last fiscal year, raising concerns of potential government pressure on data reporting.
Notably, among international financial institutions, the IMF’s 2.5% growth projection is the highest. In contrast, the World Bank anticipates 1.7% growth, the Asian Development Bank predicts 1.9%, and the State Bank of Pakistan (SBP) foresees growth around 2%. Given Pakistan’s annual population growth rate of 2.6%, maintaining economic growth below this rate could lead to increased unemployment and poverty in the country.
The IMF’s report projects that Pakistan’s economic growth may reach 5% by 2028, with this forecast subject to change due to rapid economic developments within the country.
The IMF has also revised its inflation projection for Pakistan downward, now forecasting an average annual inflation rate of 23.6% for the current fiscal year. This represents a notable decrease from the previous projection made in July, which was 2.3% higher. In June of the following year, the IMF predicts an annual inflation rate of 17.6%, though it still remains significantly higher than the official targets set by the central bank and the federal government.
Inflation in Pakistan has been primarily driven by increases in energy and petroleum product prices, coupled with currency devaluation. However, the recent stabilization of the Pakistani rupee, partly due to military-led efforts against currency smuggling, has provided some relief.
The IMF suggests that Pakistan’s current account deficit may slightly exceed the official target, remaining around 1.8% of GDP for the current fiscal year. Additionally, remittances to Pakistan have seen a decline, with a notable drop of 11.5% in September compared to the same month the previous year.
Furthermore, the IMF projects a decrease in the unemployment rate in Pakistan from 8.5% in the previous year to 8% in the current fiscal year. On a global scale, the IMF anticipates a slowdown in economic growth, dropping from 3.5% in 2022 to 3% in the current year, and further declining to 2.9% in the subsequent year, slightly down from previous projections in July.