Pakistan’s Economy to Grow Just 0.5% This Year, Says IMF
The International Monetary Fund (IMF) has revised its growth forecast for Pakistan’s economy, predicting that it will grow by just 0.5% this year, down from 6% in 2022. The IMF’s World Economic Outlook report, released on Tuesday, also forecasts inflation of 27% for the country’s more than 230 million people. Unemployment is expected to continue to rise as Pakistan struggles to avoid default while recovering from last summer’s floods, which killed 1,739 people and caused $30bn in damages.
Pakistan’s coalition government, led by Prime Minister Shahbaz Sharif, is in talks with the IMF to receive a key tranche of a $6bn bailout package signed in 2019 by Sharif’s predecessor Imran Khan. In recent weeks, the government has cut subsidies and raised taxes to comply with the bailout terms and secure the release of the $1.2bn portion of the deal that has been stalled since December. However, these measures have resulted in increases in the price of food, gas, and power.
Sharif’s government has become unpopular due to higher food costs, although he has blamed Khan, who is now the country’s opposition leader, for mismanaging the economy when he was in power. Khan was deposed last April in a no-confidence vote in parliament and has since been leading rallies in a failed attempt to force Sharif to agree to an early election, which is scheduled for later this year.
The IMF’s revised growth forecast for Pakistan’s economy is a significant blow to the country’s efforts to recover from its economic woes. The government has been struggling to balance its budget, reduce its debt burden, and revive its economy, which has been hit hard by a combination of factors, including political instability, corruption, and terrorism.
The IMF’s report highlights the challenges facing Pakistan’s economy and the urgent need for the government to take bold and decisive action to address them. The report recommends that the government implement structural reforms to improve the business environment, increase investment, and boost productivity. It also calls for measures to strengthen the country’s financial sector, including improving the regulatory framework, enhancing transparency, and promoting financial inclusion.
The IMF’s report also underscores the importance of international support for Pakistan’s economic recovery. The report notes that the government’s efforts to implement reforms and stabilize the economy will require significant financial assistance from the international community. The IMF has already provided a substantial amount of financial support to Pakistan, but more will be needed to ensure that the country can overcome its economic challenges.
In conclusion, Pakistan’s economy is facing significant challenges, and the IMF’s revised growth forecast is a stark reminder of the urgent need for the government to take bold and decisive action to address them. The government must implement structural reforms, strengthen the financial sector, and seek international support to ensure that Pakistan can overcome its economic woes and achieve sustainable growth in the years ahead.