ISLAMABAD - After the World Bank and Asian Development Bank (ADB), the International Monetary Fund (IMF) has also projected lower GDP growth for Pakistan only at 0.5 percent for the current fiscal year.
The IMF in its latest report, “World Economic Outlook (WEO): A rocky recovery” has projected that Pakistan’s growth rate would decline, inflation and unemployment rates would increase and current account deficit would narrow in the ongoing financial year. The Fund has estimated that Pakistan’s growth would decline to 0.5 percent in FY23 from 6 percent in the last fiscal year FY22. However, the growth would increase to 3.5 percent in the upcoming fiscal year FY24. The IMF has estimated that Pakistan’s inflation rate would increase to 27.1 percent in the current fiscal year from 12.1 percent of the previous year. Meanwhile, the inflation would reduce to 21.9 percent in the next fiscal year FY24. Similarly, the unemployment rate would also enhance in the current fiscal year to seven percent from 6.2 percent of the previous year. The inflation rate would slightly reducd to 6.8 percent in next year 2024.
The current account balance, as a percent of GDP, is projected at negative 2.3 percent in FY23 compared to negative 4.6 percent in FY22 and is projected at negative 2.4 percent for FY24. Earlier, the ADB had noted that Pakistan’s economic growth is expected to slow significantly in the current fiscal year in the wake of last year’s devastating floods, ballooning inflation, a current account deficit, and an ongoing foreign exchange crisis. “Growth is projected to decelerate to 0.6 percent in FY2023,” said Asian Development Outlook (ADO) April 2023, ADB’s flagship economic report. Meanwhile, according to the World Bank’s latest Pakistan Development Update: Recent Economic Developments, Outlook, and Risks, Pakistan’s economy is expected to grow by only 0.4 percent in the current fiscal year ending June 2023. According to the IMF report, the baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent. Global headline inflation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflation’s return to target is unlikely before 2025 in most cases.