The International Monetary Fund slashed Pakistan’s real GDP growth rate projection from 2% to 0.5% for the current fiscal year.
In the latest World Economic Outlook report released on Tuesday, the IMF forecast that the country’s GDP growth rate would be 3.5% in fiscal year 2024. In its last report issued in January, the lender had downgraded the growth projection to 2% from 3.5%.
The IMF report forecast that inflation, measured by the Consumer Price Index, would be recorded around 27.1% in FY23 and fall to 21.9% in FY24.
Meanwhile, the current account deficit was forecast to clock in at 2.3% and 2.4% in FY23 and FY24, respectively.
The IMF’s downgrading comes days after the World Bank and Asian Development Bank lowered Pakistan’s growth rate projections to 0.4% and 0.6%, respectively.
The country’s economy has been struggling to recover, with inflation at a decades-high level and several companies shutting down or reducing operations citing the economic situation. The delay in the release of an economic bailout by the IMF is adding to the uncertain situation.
The international lender lowered its outlook for the global economy as well, while predicting that most countries would avoid a recession this year despite economic and geopolitical concerns.
The IMF predicted the global economy would grow by 2.8% this year and 3% in 2024, a decline of 0.1% from its previous forecasts in January.
“The global economy is recovering from the shocks of the last few years, and particularly of course the pandemic, but also the Russian in vasion of Ukraine,” IMF chief economist Pierre-Olivier Gourinchas said in a press briefing ahead of the report’s release.
The leadership of the World Bank and IMF hope to use this year’s spring meetings to promote an ambitious reform and fundraising agenda.
But their efforts will likely be overshadowed by concerns among member states over high inflation, rising geopolitical tension, and financial stability.
