Latest news with #PakistanDevelopmentOutlook
Business Recorder
23-04-2025
- Business
- Business Recorder
IMF lowers Pakistan's FY25 GDP growth forecast to 2.6%
ISLAMABAD: The International Monetary Fund (IMF) has revised downward GDP growth rate projection by 0.4 percent for Pakistan to 2.6 percent for fiscal year 2025 against earlier projection of 3 percent (January 2025). The Fund in its latest report, 'World Economic Outlook (WEO) a critical juncture amid policy shifts', projected GDP growth for Pakistan at 2.6 percent for 2025 and 3.6 percent for 2026. The IMF in January 2025 WEO had projected GDP growth rate for Pakistan at 3 per cent for fiscal year 2025 and 4 percent for 2026. Pakistan's GDP grows 0.92% in July-Sept, 2.5% in FY24 The Fund has revised downward the inflation rate projection to 5.1 percent for the current fiscal year and 7.7 percent in fiscal year 2026 against 23.4 percent in fiscal year 2024. The unemployment in the country is projected to decrease to 8 percent in 2025 against 8.3 percent in 2024, which is projected to be 7.5 percent in 2026. The current account balance is projected at negative 0.1 percent for 2025 compared to negative 0.5 percent in 2024 and projected negative 0.4 percent for 2026. The Fund projected general government net lending/ borrowing at negative 5.6 percent of GDP for 2025 compared to negative 6.8 percent of GDP for 2024. However, the Asian Development Bank (ADB) has also revised Pakistan's GDP growth forecast for the fiscal year 2025 down to 2.5 percent (3 percent in December 2024), while saying that the country's outlook depends largely on the success of ongoing economic reform. The Bank also stated that the growth forecasts were finalised prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously. The World Bank cancelled the release of its Pakistan Development Outlook earlier scheduled for April 9 to reassess projections after Trump's announcement. The Fund report noted that after enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilised, with steady yet underwhelming growth rates. However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 WEO Update, reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January. It further stated that intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments. Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy. Copyright Business Recorder, 2025
Business Recorder
23-04-2025
- Business
- Business Recorder
Country's GDP growth revised downward by IMF
ISLAMABAD: The International Monetary Fund (IMF) has revised downward GDP growth rate projection by 0.4 percent for Pakistan to 2.6 percent for fiscal year 2025 against earlier projection of 3 percent (January 2025). The Fund in its latest report, 'World Economic Outlook (WEO) a critical juncture amid policy shifts', projected GDP growth for Pakistan at 2.6 percent for 2025 and 3.6 percent for 2026. The IMF in January 2025 WEO had projected GDP growth rate for Pakistan at 3 per cent for fiscal year 2025 and 4 percent for 2026. Pakistan's GDP grows 0.92% in July-Sept, 2.5% in FY24 The Fund has revised downward the inflation rate projection to 5.1 percent for the current fiscal year and 7.7 percent in fiscal year 2026 against 23.4 percent in fiscal year 2024. The unemployment in the country is projected to decrease to 8 percent in 2025 against 8.3 percent in 2024, which is projected to be 7.5 percent in 2026. The current account balance is projected at negative 0.1 percent for 2025 compared to negative 0.5 percent in 2024 and projected negative 0.4 percent for 2026. The Fund projected general government net lending/ borrowing at negative 5.6 percent of GDP for 2025 compared to negative 6.8 percent of GDP for 2024. However, the Asian Development Bank (ADB) has also revised Pakistan's GDP growth forecast for the fiscal year 2025 down to 2.5 percent (3 percent in December 2024), while saying that the country's outlook depends largely on the success of ongoing economic reform. The Bank also stated that the growth forecasts were finalised prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously. The World Bank cancelled the release of its Pakistan Development Outlook earlier scheduled for April 9 to reassess projections after Trump's announcement. The Fund report noted that after enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilised, with steady yet underwhelming growth rates. However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 WEO Update, reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January. It further stated that intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments. Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy. Copyright Business Recorder, 2025
Express Tribune
09-04-2025
- Business
- Express Tribune
ADB cuts Pakistan growth to 2.5%
Listen to article The Asian Development Bank (ADB) on Wednesday cut Pakistan's economic growth forecast to 2.5% for this fiscal year, marking the slowest pace in South Asia, and cautioned that any deviation from the hard path of stabilisation could undermine the nascent recovery. The lender also warned that any escalation in political tensions in Pakistan could erode business confidence, potentially hurting investment and growth prospects. In its flagship biannual report, the Asian Development Outlook, the Manila-based agency also lowered Pakistan's inflation projection to 6% for this fiscal yearstill the second-highest rate in South Asia after Bangladesh. The ADB said it finalised the report before new tariffs were announced by President Donald Trump. The World Bank cancelled this week's release of its Pakistan Development Outlook to reassess projections after Trump's announcement. Trump's "liberation day" unilateral tariffs have triggered global uncertainty, retaliation, and fears about the future of the world economy and trade, according to independent economists and trade experts. The ADB noted that the Asia-Pacific region "now faces a complex economic landscape, with increasing trade tensions, policy shifts, and geopolitical conflict." Pakistan's growth is projected to stay at 2.5% in 2025 and rise to 3% in 2026, supported by reforms meant to strengthen private investment. Just three months ago, the ADB had raised the forecast to 3% for the current year, which it has now cut. The 2.5% growth rate is the lowest in South Asia, even lower than war-torn and sanctions-hit Afghanistan. Inflation in Pakistan is anticipated to drop to 6% this fiscal year and 5.8% in 2026, reported the lender, adding that the 6% rate still trails only Bangladesh's 10.2% in the region. The inflation drop is expected to be driven by moderate domestic demand, declining global commodity prices, and a favourable base effect. Core inflation, while easing, remains elevated, it said. However, inflation may rise in the coming months, partly due to planned reforms in the gas sector, including higher gas prices for captive power plants, which will likely raise input costs for these facilities. Overall, the inflation outlook remains exposed to risks from volatile global commodity prices, adverse trade policy shifts, energy tariff adjustments, and additional measures to meet revenue targets. The central bank is expected to adopt a cautious approach to easing monetary policy. Challenges to the outlook The ADB said Pakistan's outlook faces major downside risks. "An improved external position and a quicker-than-anticipated drop in inflation could encourage the government to relax macroeconomic policies, possibly triggering a reemergence of balance-of-payment pressures and jeopardising Pakistan's hard-earned macroeconomic stability." The government also faces internal and private sector pressure to loosen fiscal policies and stimulate growth and jobs. However, any deviation from fiscal consolidation due to weak revenue or spending pressures could raise debt, increase borrowing costs, crowd out private lending, and destabilise the exchange rate. "Debt sustainability risks remain pronounced in the Lao PDR, Maldives, Pakistan, and Sri Lanka," the ADB noted. Policy lapses could threaten disbursements from multilateral and bilateral partners, cutting financial inflows and pressuring the exchange rate. Recovery in business confidence might also weaken if political tensions rise, limiting investment and consumption and hurting growth. Another risk to Pakistan's outlook is "insufficient rain and the potential for drought," which could damage food security and further suppress growth. Growth in South Asia has slowed overall, with India's decelerationdue to delays in public investmentoffsetting recoveries in Pakistan and Sri Lanka. The ADB said that reforms in Pakistan have progressed under the International Monetary Fund (IMF) Extended Fund Facility, launched in October 2024, helping to stabilise the economy. However, the country still faces serious vulnerabilities and structural challenges. The ADB stressed that consistent policy implementation is crucial for resilience and, sustainable and inclusive growth. Provisional data from the first quarter points to a slow but sustained recovery, with performance in agriculture, industry, and services remaining lukewarm. Fiscal consolidation and weaker farm income, driven by an expected decline in major crop production, will likely constrain activity. Effective implementation of reforms should foster a more stable environment and gradually remove structural obstacles. Strong remittances, lower inflation, and monetary easing should support private consumption and growth. Sustaining fiscal consolidation and reducing risks from state-owned enterprises, particularly in the energy sector, are essential. The current account deficit is expected to remain contained this fiscal year. However, imports are likely to rise in the remaining months, as economic activity picks up, supported by monetary easing and improved macroeconomic stability. This could erase the current account surplus. Anticipated growth in remittances and expected financial inflows should lift official reserves to $13 billionequal to 2.9 months of import coverby June 2025, predicted the ADB in line with recent statements by Finance Minister Muhammad Aurangzeb.
