Pakistan’s economy is expected to rebound with Gross Domestic Product (GDP) to grow by 2.1% in the fiscal year 2024, after contracting by 0.17% in the previous year, according to a report by Bloomberg. The growth rate will likely accelerate to 4.8% in the fiscal year 2025, the report added.
The report cited several factors that will support the economic recovery, such as IMF loans, easing supply bottlenecks, and rate cuts coupled with political stability.
Pakistan has received preliminary approval for another loan tranche of $700 million from the International Monetary Fund (IMF), which will help boost foreign exchange reserves and avert debt default. Pakistan will also likely negotiate a new longer-term deal with the IMF once the current program ends in March 2024.
Pakistan’s economic activity grew by 3.2% between June and October 2023, as supply bottlenecks eased and imports of raw materials and machinery increased.
The State Bank of Pakistan (SBP) will likely start cutting its key policy rate from March 2024, as inflation slows down. Bloomberg forecasts that the SBP will cut rates by 700 basis points to 15% by the end of 2024.
Pakistan’s farming sector is expected to perform better in 2024, as the cultivation area for major crops such as rice, cotton, and maize has increased compared to 2023, when floods damaged the crops.
The general elections scheduled for February 2024 should lead to greater political stability and investor confidence, the report said.
However, the report also warned of some headwinds to the growth outlook, such as high taxes, fuel and energy bills, debt servicing costs, and potential disruptions to the IMF aid or the elections.
2.1%, does this take into account population growth of 2.5% ?
If not per capita we will be poorer.