IMF predicts slower growth, lower inflation for Pakistan in latest Regional Outlook

The International Monetary Fund (IMF) has expressed concerns that Pakistan may not meet its economic growth and inflation targets for the current fiscal year, according to its Middle East and Central Asia Regional Economic Outlook released on Tuesday.

The report projects Pakistan’s economic growth rate at 3.6 percent for the ongoing fiscal year, falling short of the federal government’s target of 4.2 percent. For the previous fiscal year, the IMF estimated Pakistan’s growth at 2.6 percent, indicating a modest recovery trend. The Fund expects growth to gradually rise to 4.5 percent by fiscal year 2030.

On inflation, the IMF estimates Pakistan’s average inflation rate at 6 percent for the current fiscal year, below the government’s target of 7.5 percent. The Fund expects inflation to ease further to 6.5 percent by 2030, compared to 5.1 percent recorded in the previous fiscal year.

In its fiscal analysis, the IMF projects Pakistan’s budget deficit at 4.1 percent of GDP for the current year. Meanwhile, the debt-to-GDP ratio is expected to remain high at 71.3 percent, slightly down from 71.6 percent last year, before potentially declining to 60.2 percent by 2030.

The report also forecasts a current account deficit of 0.4 percent of GDP for the current fiscal year, compared to 0.5 percent last year. By 2030, the deficit is projected to widen moderately to 1.1 percent of GDP.

The IMF’s findings suggest that while Pakistan’s economy may show gradual improvement in the coming years, meeting near-term growth and inflation targets will remain a challenge amid fiscal constraints and external pressures.