IMF lowers Pakistan’s GDP growth forecast to 3 per cent | World News
According to an article in Pakistani media, the IMF reduced Pakistan’s GDP growth forecast from 3.2 percent to 3 percent; This is worrying news for a country with a rapidly growing population.
The large-scale manufacturing sector actually contracted by 1.25 per cent in the first five months of the ongoing fiscal and exports appear to be slowing down. The article in The News International stated that aside from foreign loans and other foreign aid, the only thing Pakistan can rely on to continue growing rapidly is remittances, which rose to an all-time high of $8.8 billion in the first quarter of fiscal 2025.
An economy so dependent on the goodwill of foreign creditors and the wages of foreigners is unlikely to deliver the sustainable growth it needs. This goal is further complicated by the fact that the conditions on which IMF assistance will continue require more taxes, fewer subsidies and concessions, and tighter budgets. This further increases the imperative for the government to undertake tough economic reforms needed to attract more foreign investment and ease the burden on inefficient state-owned enterprises.
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The article noted that while stability should be celebrated, a stable economy without a lot of growth, investment or competitive companies cannot remain stable for long.
Disappointing growth remains the main blemish on the economic picture in the fiscal half that saw a recovery in the current account, a more stable and stronger rupee, falling inflation and much lower policy rates.
While the current account surplus, policy rate cuts and stabilization of prices certainly do, they all depend heavily on the external support the country has received, particularly the IMF bailout package last summer. In fact, the current account surplus coincided with the UAE’s decision to transfer over $2 billion in deposits to the State Bank of Pakistan for another year. The article added that it is difficult to give much credit to domestic economic policy for this decision.
