The International Monetary Fund (IMF) has adjusted its GDP growth rate forecast for Pakistan downward by 0.5 percent to 2 percent for the year 2024. The latest report titled “World Economic Outlook Update: Moderating Inflation and Steady Growth Open Path to Soft Landing” also reflects a 0.1 percent decrease in the GDP projection for the subsequent fiscal year, estimating it at 3.5 percent.
In comparison, the Fund had initially projected a GDP growth rate of 2.5 percent for Pakistan in 2024 during October 2023. The global growth outlook for 2024 is set at 3.1 percent, with a slight increase of 0.2 percentage points from the October 2023 forecast. This positive adjustment is attributed to the resilience observed in the United States and various large emerging market and developing economies, along with fiscal support in China.
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However, the overall forecast for 2024–25 falls below the historical average of 3.8 percent (2000–19). Factors such as elevated central bank policy rates aimed at combating inflation, a reduction in fiscal support amid high debt levels affecting economic activity, and low underlying productivity growth contribute to this trend. Notably, global headline inflation is anticipated to decrease to 5.8 percent in 2024 and further to 4.4 percent in 2025. The revised 2025 forecast reflects a more optimistic scenario of falling inflation.
The report highlights that inflation is declining more rapidly than anticipated across various regions, thanks to the resolution of supply-side issues and the implementation of restrictive monetary policies. As a result, the likelihood of a hard landing has diminished, and global growth risks are perceived as broadly balanced. On a positive note, accelerated disinflation could lead to additional easing of financial conditions.
