Saul Loeb—AFP
The International Monetary Fund (IMF) on Tuesday forecast Pakistan’s economic growth rate for 2021-22 at 4 percent, while warning of “near-term” risks from higher-than-estimated inflation and current account deficit.
Earlier, the World Bank had estimated Pakistan’s growth for the ongoing fiscal year to hit 4.3 percent, while the Asian Development Bank had estimated it at 4 percent. However, the budget presented by the ousted Pakistan Tehreek-e-Insaf (PTI)-led government had set it at 4.8 percent. In its World Economic Outlook 2022 report, the IMF said it expected Pakistan’s growth to increase to 4.2 percent of its GDP in the next fiscal year.
It estimated Pakistan’s average rate of inflation for the ongoing fiscal year at 11.2 percent, against 8.9 percent last year. Similarly, it said that the country’s current account deficit would likely hit 5.3 percent of GDP this year, compared to just 0.6 percent last year, while the unemployment rate would equal 7 percent, which is slightly lower than the 7.4 percent reported last year.
All these figures raise significant questions about the targets set by the PTI-led regime, which had claimed that inflation would average out at 8 percent, while the current account deficit would hit 0.7 percent of GDP. The ousted government is even now maintaining that it has left the national economy “in a great state”—a claim roundly rejected by new Finance Minister Miftah Ismail, who has said the country’s economic situation is “dire.”
Looking forward, the IMF has project the rate of inflation to reduce to 10.5 percent next year, with the current account deficit likewise dropping to 4.1 percent of GDP. It also estimated the rate of unemployment in Pakistan to reduce to 6.7 percent next year.
Global situation
Warning of the ongoing risks posed by the Russian invasion of Ukraine, the IMF projected global growth to slow down from an estimated 6.1 percent in 2021 to 3.6 percent next year. However, it stressed, this was based on the assumption that the conflict would not spread beyond Russia and Ukraine, and any further sanctions on Moscow would exempt the energy sector. Similarly, it said, there was an assumption that health and economic impacts of the COVID-19 pandemic would continue to decline throughout 2022.