Pakistan's economy is set to improve in 2024, albeit at a slower pace than expected, with its gross domestic product (GDP) improving from a recessionary 2023. Inflation is projected to lower along with a boost in jobs. This was predicted in a new report published by the International Monetary Fund (IMF) on Wednesday.
The World Economic Outlook report by the IMF, titled "Steady but slow: Resilience amid divergence", reviewed the global economy. The baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies—where growth is expected to rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025—will be offset by a modest slowdown in emerging market and developing economies from 4.3% in 2023 to 4.2% in both 2024 and 2025.
The global economy, IMF said has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability.
The report noted that Pakistan's real GDP in 2023 stood at a recessionary level of -0.2%. Revised figures from the Pakistan Bureau of Statistics show that Pakistan registered GDP growth of -0.17% in the fiscal year 2022-23.
However, it projected that this would robustly improve for 2024 to 2.0%. This was still slower than the government's target of 3.5% growth for the fiscal year 2023-24. Pakistan's economy, however, would improve to 3.5% in 2025. By 2029, it was projected to increase to 5.0%, signifying a slower growth trajectory for the remainder of the decade.
Similarly, consumer prices (inflation) were recorded at 29.2% of the national annual average for 2023. This is projected to fall to 24.8% in 2024. By contrast, the government had set a target of reducing inflation to 21%.
By 2025, the IMF expects inflation to halve to 12.7%, signifying economic strengthening. By 2029, it is projected that inflation will fall to 6.5%.
Unemployment, too, is projected to decline. From 8.5% in 2023, it is expected to fall to 8.0% in 2024 and 7.5% in 2025. By 2029, the deficit is expected to grow to -1.5%.
However, the report noted that Pakistan's current account deficit will likely suffer and worsen over the projected period since Pakistan is a net oil importer. A major economic challenge Islamabad has struggled to contain since 2022 is that Pakistan's current account balance stood at -0.7 in 2023, but it is projected to worsen to -1.1 in 2024 and -1.2 in 2025.