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IMF provides updated outlook for Pakistan with 2pct GDP

The International Monetary Fund (IMF) has provided an updated outlook for Pakistan’s economic indicators, indicating positive trends in GDP growth, inflation, unemployment, and current account balance.

In the current fiscal year, Pakistan’s GDP growth rate is projected at two percent, a significant improvement from the previous year’s -0.2 percent. Moreover, inflation is expected to decline from 29.2 percent to 24.8 percent, while unemployment is forecasted to decrease from 8.5 percent to eight percent.

Looking ahead, the IMF anticipates further growth, with Pakistan’s GDP projected to reach 3.5 percent in the fiscal year 2025. In line with this positive trajectory, inflation is forecasted to decrease to 12.7 percent by 2025. Additionally, unemployment is expected to continue its downward trend, reaching 7.5 percent in 2025.

However, challenges remain, particularly in the current account balance, which is projected to be negative 1.1 percent for 2024, reflecting a slight increase from the previous year. Looking further ahead, the balance is expected to remain negative at 1.2 percent in 2025.

The IMF’s “World Economic Outlook (WEO)” report underscores these projections, noting a steady but slow growth trajectory globally. While advanced economies are expected to see a slight acceleration in growth, emerging markets and developing economies may experience a modest slowdown.

A notable aspect of the forecast is the expected decline in global inflation, which is projected to decrease steadily from 6.8 percent in 2023 to 4.5 percent in 2025. Despite uncertainties, economic activity has shown resilience, defying fears of stagflation and recession. Factors such as government spending and household consumption have supported growth, along with an unexpected expansion in the labor force participation rate.

Looking forward, as inflation approaches target levels, central banks are expected to ease monetary policy, while fiscal policies may tighten to address high government debt levels. This adjustment could potentially weigh on future growth.

In summary, while Pakistan’s economic indicators show signs of improvement, continued efforts are needed to address challenges and sustain growth momentum amidst evolving global economic dynamics.

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