Economic Woes Continue for Pakistan: IMF’s Revised Outlook

by blogstique · October 11, 2023

In the latest report from the International Monetary Fund (IMF), Pakistan faces a challenging economic landscape. The GDP growth projection has been lowered, with expectations of just 2.5 percent growth in the current fiscal year. This is down from the official projection of 3.5 percent for FY2024 as Economic Woes Continue for Pakistan

Of significant concern is the persistence of stagflation, a scenario where inflation remains high, and economic growth stalls. Unemployment is expected to remain elevated, with the rate hovering at 8 percent in FY2024. This is a notable increase from 8.5 percent in FY2023 and 6.2 percent in FY2022, indicating a worrying trend.

Additionally, the IMF’s report highlights a troubling contraction in GDP growth during the previous fiscal year, reaching -0.5 percent. Although the government had initially reported a modest growth rate of 0.29 percent, this latest projection paints a different picture.

Under the IMF program, the release of quarterly GDP figures is expected by the end of November 2023, and it’s likely to confirm this contraction in economic growth for the previous fiscal year.

Consumer Price Index:

Furthermore, inflation, as measured by the Consumer Price Index (CPI), is projected to reach 23.6 percent for the current fiscal year, up from the official projection of 21.9 percent. This combination of low growth and high inflation creates stagflation, which can have dire consequences, particularly for vulnerable sections of society, potentially pushing them further into poverty.

Notably, the IMF’s inflation projection is a slight improvement from its earlier estimate, providing a small glimmer of hope in an otherwise challenging economic landscape.

One of the most concerning indicators is the continued persistence of the current account deficit, projected at -1.8 percent of GDP for FY2023-24. This is a significant increase from -0.7 percent in the previous fiscal year, indicating ongoing economic challenges for Pakistan.