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Sunday May 19, 2024

IMF downgrades Pakistan’s GDP growth rate from 3.5pc to 2pc

By Our Correspondent
February 01, 2023
A representational image of Pakistani economy. — Geo.tv illustrations
A representational image of Pakistani economy. — Geo.tv illustrations

ISLAMABAD: The IMF has revised the downward GDP growth rate projection for Pakistan from 3.5 percent to 2 percent for the current fiscal. It is also projected that the GDP growth rate would rebound in the next fiscal 2023-24 up to 4.4 percent.

According to IMF’s World Economic Outlook (WEO) released on Tuesday, global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024.

The forecast for 2023 is 0.2 percentage points higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000–19) average of 3.8 percent. The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity. The rapid spread of COVID-19 in China dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery. Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 percent. The balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022 WEO. On the upside, a stronger boost from pent-up demand in numerous economies or a faster fall in inflation is plausible. On the downside, severe health outcomes in China could hold back the recovery, Russia’s war in Ukraine could escalate, and tighter global financing costs could worsen debt distress. Financial markets could also suddenly reprice in response to adverse inflation news, while further geopolitical fragmentation could hamper economic progress.