IMF projects 3.5% GDP growth for Pakistan in 2025

IMF projects 3.5% GDP growth for Pakistan in 2025

Islamabad: The International Monetary Fund (IMF) has maintained Pakistan’s GDP growth rate projection at 3.5 percent for the fiscal year 2025, according to its latest report released on July 17.

In the report titled “World Economic Outlook (WEO) update: The Global Economy in a Sticky Spot,” the IMF noted that Pakistan’s GDP is expected to grow by 3.5 percent in 2025, an increase from 2 percent in 2024. This projection is consistent with the IMF’s earlier forecast in April 2024. In contrast, the World Bank (WB) has projected a lower GDP growth rate of 2.3 percent for Pakistan for the fiscal year 2024-25, compared to the government’s more optimistic projection of 3.6 percent. Globally, the IMF expects economic growth to align with its April 2024 forecast, with projections of 3.2 percent in 2024 and 3.3 percent in 2025. The report highlights that the varied momentum in economic activity at the start of the year has narrowed the output divergence across different economies, as cyclical factors diminish and activity aligns more closely with its potential.

However, the report points out that services price inflation is hindering progress on disinflation, complicating the normalization of monetary policy. The IMF warns of increased upside risks to inflation, which could lead to higher-for-longer interest rates amid escalating trade tensions and increased policy uncertainty. To manage these risks and sustain growth, the IMF emphasises the importance of a carefully sequenced policy mix aimed at achieving price stability and replenishing diminished economic buffers. The Fund also notes that global economic activity and world trade showed signs of strengthening at the beginning of the year, driven by robust exports from Asia, particularly in the technology sector.