Outlook
ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s economy is expected to experience a growth rate of 2.5% in 2024, with the potential to increase to 5% by 2028.
The IMF’s World Economic Outlook indicates a decline in inflation in Pakistan, projected to drop from 29.2% in 2023 to 23.6% in 2024. The Fund released its WEO on Tuesday.
Additionally, the report forecasts a reduction in Pakistan’s unemployment rate from 8.5% to 8% in the coming year.
However, it also anticipates an increase in the current account deficit from 0.7% to 1.8% in 2024.
Meanwhile, the IMF painted a cautious picture of the global economy, acknowledging that it is gradually recovering. The IMF projects global economic growth to remain at 3% for the current year, consistent with its previous forecast from July.
However, the forecast for the following year has been slightly adjusted downward to 2.9%. The IMF characterizes the global economy as still facing challenges, including high inflation, tight monetary policies, the Russia-Ukraine conflict, and extreme weather events.
The report highlights that the slowdown is more pronounced in developed economies compared to developing nations. In 2022, as the health and economic effects of Covid-19 began to recede, the global economy grew by 3.5%. Nevertheless, elevated inflation in many countries remains a significant factor affecting growth, and the impact of policies aimed at curbing inflation is expected to dampen economic activity in the future, according to the IMF.
The report also provides insights into the world’s two largest economies. The United States is experiencing stronger-than-expected growth, with a revised GDP growth rate of 2.1% for the current year and an anticipated growth rate of 1.5% for the following year, driven by robust consumption and investment.
In contrast, China’s growth forecast has been revised downward, with an expected growth rate of 5% for the current year (0.2 percentage points lower than previous forecasts) and a projection of 4.2% for the following year (0.3 percentage points lower).
The IMF highlights that China’s real estate sector crisis not only affects its domestic finances but also poses a global economic risk, necessitating a change in its credit-driven real estate growth model.
The IMF also identifies Russia’s invasion of Ukraine as an ongoing risk to the global economy. The Fund noted its impact on commodity markets and the potential for worsening geopolitical tensions.
In summary, the IMF’s updated World Economic Outlook maintains a global growth estimate of 3% for this year while reducing the 2024 forecast to 2.9%, down 0.1% from the previous July forecast.
