IMF forecasts 3.6% GDP growth for Pakistan in next fiscal year

The International Monetary Fund (IMF) has released its Country Partnership Report following the completion of its initial economic review of Pakistan.

According to the IMF report, Pakistan’s annual per capita income stands at $1,566, while the national poverty rate is 21.9 percent.

For the upcoming fiscal year, the IMF projects GDP growth at 3.6 percent and anticipates an unemployment rate of 7.5 percent.

Inflation is expected to average 7.7 percent, while government expenditures may rise to 20.3 percent of GDP.

The IMF report forecasts that by fiscal year 2026, the country’s revenue and grants will reach 15.2 percent of GDP, while the budget deficit may stand at 5.1 percent.

The primary balance is projected at 1.6 percent of GDP, and the total debt burden could reach 69.2 percent.

External debt is expected to remain at 22.2 percent and domestic debt at 47.2 percent of GDP. The current account deficit is forecast at 4% of GDP, and investment may hover around 0.6 percent.

According to the IMF, Pakistan’s foreign exchange reserves could increase to $17.68 billion in the next fiscal year.

Notably, during the current fiscal year, the country maintained a current account surplus under the loan programme.

The inflation rate was also recorded at historically low levels, with an overall estimate of 9% for the year.

While economic recovery is underway, growth during the first quarter was lower than anticipated. The IMF has emphasised the need for Pakistan to strictly adhere to all targets under the loan programme to ensure sustainable growth.

To control inflation, the policy rate will need to remain tight. The report also stresses timely recoveries and tariff adjustments in the energy sector.

Additionally, it highlights that the Resilience and Sustainability Fund will aid Pakistan in addressing the impacts of climate change, with enhanced coordination between federal and provincial governments.