ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s GDP growth at 1.5 per cent in 2021 and 4 per cent in 2022, as the IMF is expecting a stronger economic recovery in 2021 as Covid-19 vaccine roll-outs get underway.
The IMF said Tuesday that it expects the world economy to grow by 6 per cent in 2021, up from its 5.5 per cent forecast in January. Looking further ahead, global GDP for 2022 is seen increasing by 4.4 per cent, higher than an earlier estimate of 4.2 per cent.
The IMF, in its annual World Economic Outlook (WEO), said the Pakistan economy is expected to grow at 4 per cent in 2022 after a contraction of 0.4 per cent in 2020. Emerging and developing Asia is anticipated to grow by 8.6 per cent in 2021 and 6 per cent in 2022.
China, the only major economy that had already returned to pre-pandemic GDP in 2020, witnessed a positive growth rate of 2.3 per cent, is projected to grow by 8.4 per cent in 2021 and 5.6 in 2022. On the other hand, IMF projected a stronger recovery for India with growth projected to be 12.5 per cent in 2021 and 6.9 per cent in 2022.
On the other hand, the financial institution projected a 12.5 per cent growth rate for India in 2021, stronger than that of China. The Indian economy is expected to grow by 6.9 per cent in 2022.
Notably in 2020, India’s economy contracted by a record eight per cent, the International Monetary Fund (IMF) said as it projected an impressive 12.5 per cent growth rate for the country in 2021.
The divergent recovery paths are likely to create significantly wider gaps in living standards between developing countries and others, compared to pre-pandemic expectations, the IMF says, explaining that cumulative per capita income losses over 2020–22, compared to pre-pandemic projections, are equivalent to 20pc of 2019 per capita GDP in emerging markets and developing economies (excluding China), while in advanced economies the losses are expected to be relatively smaller, at 11pc. “This has reversed gains in poverty reduction, with an additional 95 million people expected to have entered the ranks of the extreme poor in 2020, and 80 million more undernourished than before”.
“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF Chief Economist Gita Gopinath said in the latest World Economic Outlook report.
The latest round of fiscal stimulus in the US, along with the vaccine rollouts across the world, have made the group more confident about the global economy this year. “Nonetheless, the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis,” Gopinath added.
The IMF estimated growth of 5.1 per cent for advanced economies this year, with the United States expanding by 6.4 per cent.
The IMF said the governments should continue to focus on “escaping the crisis” by providing fiscal support, including to their healthcare systems. In a second phase, “policymakers will need to limit long-term economic scarring” from the crisis and boost public investment, it added.
“Without additional efforts to give all people a fair shot, cross-country gaps in living standards could widen significantly, and decades-long trends of global poverty reduction could reverse,” Gopinath said.