According to the International Monetary Fund (IMF), Pakistan’s economic growth rate would be 4.2 percent in fiscal year 2023, while it will be 4 percent this fiscal year, according to the IMF’s report “World Economic Outlook” released on Tuesday.
The IMF’s growth prediction for FY22 is similar to those of other institutions, with the World Bank forecasting 4.3 percent and the Asian Development Bank forecasting 4 percent. Meanwhile, Moody’s, a credit rating service, put the figure at 3-4 percent.
The predicted growth rate of 4% is, however, lower than the 4.8 percent target set in the government budget for FY22.
Looking ahead, headline inflation is expected to be 11.2 percent and 10.5 percent in FY22 and FY23, respectively, compared to 8.9 percent last year.
Meanwhile, Pakistan’s current account deficit is expected to rise to 5.3 percent of GDP in FY22, up from 0.6 percent the previous fiscal year, before falling to 4.1 percent of GDP in FY23.
In terms of unemployment, the fund forecasts that Pakistan’s unemployment rate would continue at 7%, unchanged from the 7.4% recorded in FY21. In FY23, it will shrink even more to 6.7 percent.
According to the analysis, economic damage from the Ukraine-Russia conflict will contribute to a severe slowdown in global growth in 2022, falling to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower than the January World Economic Outlook Update for 2022 and 2023, respectively. Over the medium run, global growth is expected to slow to around 3.3 percent after 2023.
Importantly, this forecast assumes that the conflict remains confined to Ukraine, and that additional sanctions against Russia do not affect the energy sector (although the impact of European countries’ decisions to wean themselves off of Russian energy remains to be seen).