imf lowers pakistan gdp growth forecast
Published on: February 3, 2024.
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The International Monetary Fund (IMF) has revised Pakistan’s GDP growth rate projection for 2024 downward by 0.5%, now expecting a growth rate of 2%. This is a decrease from the previously projected negative growth rate of 0.2% for 2023. The IMF also revised the GDP projection for the next fiscal year, estimating a growth rate of 3.5%, a decrease of 0.1% from the previous projection.
On a global scale, the IMF forecasts a growth rate of 3.1% in 2024 and 3.2% in 2025. This 2024 forecast is 0.2 percentage points higher than the previous projection from October 2023. The upward revision is attributed to the resilience of the United States, several large emerging market economies, and developing economies, as well as fiscal support in China.
The IMF expects global headline inflation to decrease faster than anticipated in most regions due to resolving supply-side issues and restrictive monetary policies. Global inflation is forecasted to reach 5.8% in 2024 and 4.4% in 2025, with a downward revision for the 2025 forecast.
With the decline in inflation and steady growth, the risk of a hard landing has diminished, and global growth risks are relatively balanced. There is the potential for further easing of financial conditions if disinflation occurs more rapidly. However, looser fiscal policies and slower reform momentum could lead to temporary economic growth at the expense of long-term adjustment costs.
The IMF emphasizes the importance of successfully managing inflation and calibrating monetary policy accordingly. It also encourages policymakers to focus on fiscal consolidation to enhance the country’s budgetary capacity, address future shocks, generate revenue for new spending priorities, and reduce public debt. The implementation of targeted and well-sequenced structural reforms is crucial for increasing productivity growth, debt sustainability, and attaining higher income levels. Additionally, improved multilateral coordination is necessary for debt resolution and mitigating the impact of climate change.
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