IMF maintains Pakistan’s growth forecast at 2pc for current fiscal year in latest outlook

The International Monetary Fund (IMF) has upheld Pakistan’s economic growth prospects for the current fiscal year at 2 per cent, despite a relatively improved global outlook. This decision, revealed in the IMF’s latest World Economic Outlook (WEO 2024) released on Tuesday, maintains the country’s growth rate at 3.5pc for the following fiscal year.

This stance by the IMF aligns with its previous downward revision in January, lowering the growth estimate from its initial projection of 2.5pc for the current fiscal year. Similarly, the growth forecast for FY25 was adjusted downwards from 3.6pc to 3.5pc.

These estimates are rooted in the IMF’s recent quarterly review of Pakistan’s macroeconomic position, conducted within the framework of the $3 billion Stand-By Arrangement (SBA). Both parties reached a Staff-Level Agreement (SLA) on March 20, reflecting the IMF’s assessment of Pakistan’s economic trajectory.

Compared to the World Bank’s forecast of 1.8pc growth earlier this month, the IMF’s projection remains slightly higher. However, it significantly diverges from the government’s ambitious 3.5pc GDP growth target for the ongoing fiscal year, albeit aligning more closely with the State Bank of Pakistan’s range of 2pc to 3pc, as announced in last month’s Monetary Policy Statement.

In terms of inflation, the IMF anticipates a deceleration to 24.8pc this year from 29.2pc last year, further dropping to 12.7pc in FY25. Meanwhile, the current account deficit is predicted to widen to 1.1pc of GDP this year, up from 0.7pc last year, with a projected increase to 1.2pc next year.

Regarding employment, the IMF foresees a gradual decline in the unemployment rate from 8.5pc in FY23 to 8pc in the ongoing fiscal year, with a further decrease to 7.5pc in the next fiscal year.

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