IMF drastically reduces Pakistan’s GDP growth forecast to 0.5%

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The International Monetary Fund (IMF) has lowered Pakistan’s GDP growth rate prediction downward from two percent to 0.5 percent, for the current fiscal year. The Fund forecast an increase in unemployment from 6.2 percent to 7 percent and an increase in inflation from 19.9 percent to 27.1 percent.

It is also important to note that the GDP growth forecast for the current fiscal year 2023 has already been lowered downward by the World Bank to 0.4% and the Asian Development Bank (ADB) to 0.6%.

IMF issued its most recent report titled “The World Economic Outlook (WEO): A shaky recovery”, on Tuesday. It said that Pakistan’s GDP is forecast to be 3.5% in the fiscal year 2024, down from 6% in the fiscal year 2022.

In addition, the Fund raised its prior estimate of the inflation rate for the current fiscal year from 19.9% to 27.1 percent. The research states that consumer prices were 12.1% in 2022 and are expected to be 21.9% in 2024.

The country’s unemployment rate is anticipated to rise to 7% in 2023 from 6.2% in 2022, which is anticipated to rise to 6.8% in 2024.

The current account balance is anticipated to be negative 2.3% in 2023, down from negative 4.6% in 2022 and negative 2.4% in 2024.

The Fund noted in a separate report titled “Global Financial Stability Report: Safeguarding Financial Stability Amid High Inflation And Geopolitical Risks,” that the official and parallel market exchange rates in some frontier markets, including Egypt, Ghana, and Pakistan, have significantly depreciated as a result of market pressure or government devaluations.