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International Monetary Fund (IMF) headquarters building is seen during the IMF/World Bank annual meetings in Washington, U.S., October 14, 2017. REUTERS/Yuri Gripas - RC12FB7FAB40

Economy

IMF predicts 1 pc growth, rising unemployment

ISLAMABAD: The International Monetary Fund (IMF) on Tuesday forecast a subdued economic growth rate for Pakistan coupled with an elevated rate of inflation and rising unemployment during the current fiscal year.

In its World Economic Outlook (WEO) 2020, the IMF projected Pakistan’s growth rate at 1%, average inflation rate at 8.8%, current account deficit at 2.5% of GDP (gross domestic product), and unemployment rising by 0.6% to 5.1pc during the current fiscal year. This is in sharp contrast with targets of 2.1% GDP growth rate, 6.5% inflation, and 1.5pc current account deficit set by the government.

Going forward, the Washington-based lending agency projected the economic growth rate recovering to 5% of GDP by 2025. It said the rate of inflation would be peaking at 10.2% at the end of FY2021. The IMF estimated current account deficit rising from 1.1% of GDP in FY2020 to 2.5% in FY2021 and then going up to 2.7% in FY2025.

The WEO projected global growth at -4.4% in 2020 — 0.8 percentage point above the June 2020 forecast. It said the stronger projection for 2020 compared with June 2020 estimates reflected the net effect of two competing factors: the upward impetus from better-than-anticipated second-quarter GDP outturns (mostly in advanced economies) versus the downdraft from persistent social distancing and stalled re-openings in the second half of the year.

The WEO noted that recovery had taken root in the third quarter of 2020 and was expected to strengthen gradually over 2021.

“The recovery is likely to be characterized by persistent social distancing until health risks are addressed and countries may have to again tighten mitigation measures depending on the spread of the virus,”

it added.

The IMF projected global growth at 5.2% in 20210.2 percentage point lower than the growth estimated in June 2020. The projected 2021 rebound following the deep 2020 downturn implies a small expected increase in global GDP over 2020-21 of 0.6 percentage point relative to 2019.

Reported by: The Truth International

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