GDP to grow at just 2.4% in FY24: Bloomberg Survey

October 09, 2023 (MLN): Pakistan's Gross Domestic Product (GDP) growth rate is expected to expand by only 2.4% in FY24, as per the latest Bloomberg survey of nine economists conducted from October 04-06.

This marks a significant slowdown from the prior Bloomberg’s survey, wherein the expected growth rate was 3.5%

However, the survey results project that GDP for the year 2025 is expected to grow by 3.7% YoY, slightly higher than the previous estimate of 3.6%.

Inflation is expected to remain elevated, with the Consumer Price Index (CPI) projected to increase by 28.14% YoY in the fourth quarter of 2023, compared to the previous estimate of 21.39% YoY for the said period.

Moreover, CPI is projected to remain high in the first quarter of 2024, at 22.85% YoY as compared to the earlier estimate of just 15.43%, further straining Pakistan's economic stability.

Monetary Policy

The survey unveiled that the State Bank of Pakistan (SBP) is expected to maintain the 23% discount rate through the end of the fourth quarter of 2023.

Furthermore, the target policy rate, which currently stands at 22% is also projected to remain unchanged through the said period.

Andrew Vogel, an economist at S&P Global, highlighted the fragility of Pakistan's economy despite the recent IMF agreement.

He stated, "Pakistan is still in a weak economic position despite its new IMF deal; recession risk is very high but stabilized. If and when political conditions are stabilized, Pakistan should see a more substantial improvement in financing and general economic conditions."

Farooq Pasha, an economist at Standard Chartered Bank, further emphasized the uncertainty surrounding Pakistan's monetary policy.

He commented, "The near-term monetary policy trajectory remains uncertain amid strengthening domestic and external headwinds.”

He was of the view that the rising trend in global fuel prices will continue to have an adverse impact on both the external sector and domestic price stability goals and will likely keep the SBP from calling an end to the current rate-hiking cycle.

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