IMF downgrades Pakistan's GDP growth estimate to 2% for FY24

January 30, 2024 (MLN): The International Monetary Fund (IMF) has downgraded Pakistan’s real GDP growth projections for fiscal year 2024 to 2% down from the previous forecast of 2.5%, according to the January World Economic Outlook issued on Tuesday.

Earlier in October, the fund had forecasted Pakistan's economy to grow 2.5% in FY24.

Moreover, for FY25, the global lender has revised Pakistan's GDP growth forecast to 3.5%, down from 3.6% in October's projections.

To note, the State Bank of Pakistan (SBP) has forecasted the real GDP growth to be in the range of 2 to 3% for FY24.

IMF further projects global growth at 3.1% in 2024 and 3.2%  in 2025, with the 2024 forecast 0.2 percentage points higher than that in the October 2023 World Economic Outlook (WEO).

This upward revision is attributed to the greater-than-expected resilience in the United States and several large emerging markets and developing economies, along with fiscal support in China.

The forecast for 2024–25 is, however, below the historical (2000–19) average of 3.8%, with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth.

Inflation is falling faster than expected in most regions, amid unwinding supply-side issues and restrictive monetary policy.

Global headline inflation is expected to fall to 5.8% in 2024 and to 4.4% in 2025, with the 2025 forecast revised down.

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