The International Monetary Fund (IMF) has projected Pakistan’s GDP growth at 3.2% during FY25, compared to 2.4% recorded in the last fiscal year.
The projection is higher than the Asian Development Bank’s (ADB) projection, which expected GDP to grow by a moderate 2.8% in the ongoing fiscal year.
IMF in its report noted that inflation in Pakistan has receded significantly amid appropriately tight fiscal and monetary policy and a contained current account and calm foreign currency market have allowed the rebuilding of reserve buffers.
The IMF expects the inflation rate in Pakistan to decelerate to 9.2% in FY25, a significant decrease as compared to 23.4% in FY24. Moreover, Pakistan’s current account deficit is expected to remain moderate but rise to 0.9% of GDP in FY25, as compared to 0.2% in FY24.
The country’s unemployment rate is also projected to decrease from 8% to 7.5% by June 2025.
Despite progress, Pakistan’s vulnerabilities, structural challenges remain formidable: IMF
The Washington-based lender expects Pakistan’s forex reserve position to improve considerably and is projected to hit $12.757 billion by June 2025, as compared to $9.38 billion in FY24.
The projections come after the IMF Executive Board approved the 37-month, $7-billion Extended Fund Facility for Pakistan on Wednesday.
Following the approval, the State Bank of Pakistan (SBP), on Friday received the first tranche of Special Drawing Rights (SDR) 760 million, equivalent to $1.03 billion, from the International Monetary Fund (IMF).
These inflows will be reflected in SBP data on reserves to be released on Thursday, October 3, 2024, it added.
The Pakistani authorities and the IMF team reached a staff-level agreement on the EFF in the amount equivalent to SDR 5,320 million (or about USD 7 billion) on July 12.
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