The International Monetary Fund (IMF) has released its forecast for Pakistan’s economic growth, projecting a 3.5% expansion in the fiscal year 2024-25 (FY25). However, this falls slightly below the Pakistani government’s target of 3.6%, which was announced in the latest budget. The forecast comes at a time of sluggish global economic activity, posing challenges for Pakistan’s economic prospects.
Pakistan’s economic survey revealed that the country’s GDP grew by only 2.4% in the fiscal year 2023-24, failing to meet the government’s 3.5% target. Chronic mismanagement within the country, compounded by the impact of the COVID-19 pandemic, disruptions from the Ukraine war, and devastating floods in 2022 that affected a significant portion of the country, have marred Pakistan’s economic landscape.
In its World Economic Outlook (WEO) update, the IMF cautioned about modest global growth over the next two years, reflecting cooling activity in the US, a bottoming-out in Europe, and robust consumption and exports in China. Despite the challenges, the IMF maintained its global GDP growth forecast for 2024 at 3.2% and slightly raised its 2025 forecast to 3.3%.
Pl subscribe to the YouTube channel of republicpolicy.com
IMF Managing Director Kristalina Georgieva described the current economic projections as part of the “tepid twenties.” The US growth forecast for 2024 was revised down to 2.6% due to slower-than-expected consumption in the first quarter. Meanwhile, the 2025 forecast remains at 1.9%, driven by a cooling labor market and moderated spending.
Pierre-Olivier Gourinchas, the IMF’s chief economist, pointed out that growth in major advanced economies is becoming more aligned, with the US showing signs of cooling and Europe poised for recovery. The IMF increased its growth forecast for China to 5.0% for 2024, aligning with the Chinese government’s target, and also raised the 2025 forecast to 4.5%. However, risks of persistent inflation and potential economic policy shifts due to upcoming elections were highlighted by the IMF.
The IMF emphasized the importance of prioritizing price stability, gradually easing monetary policy, rebuilding fiscal buffers depleted during the pandemic, and implementing policies that promote trade and productivity growth. These recommendations aim to address the challenges posed by global economic headwinds and support sustainable economic growth for Pakistan and other economies.
