Pakistan's economy to face global challenges in 2024, modest GDP growth expected: UN report

The United Nations' World Economic Situation and Prospects report for 2024 provides a detailed analysis of Pakistan's economic landscape, projecting a modest GDP growth of two percent in 2024 and a slightly improved 2.4 percent in 2025.

Despite these projections, the report underscores concerning indicators, pointing to latent risks and structural vulnerabilities in the global economy.

South Asia's major economies, including India, Pakistan, and Bangladesh, are categorized as lower-middle-income countries, with persistent challenges, particularly in the area of food security.

In 2023, both Bangladesh and Pakistan witnessed an increase in people facing acute food insecurity, contrasting with Sri Lanka, where the situation improved. Afghanistan remains the most adversely affected, with 46 percent of its population facing acute food insecurity.

Examining Pakistan's economic specifics, the report reveals alarming statistics. The inflation rate surged to 39.18 percent in 2023, leading the State Bank of Pakistan to maintain a record-high policy rate of 22 percent since June 2023. Additionally, the country experienced a currency depreciation of over 20 percent in the same year.

Pakistan is grappling with substantial sovereign debt and an unsustainable debt-servicing burden. External debt accounted for 36.5 percent of the country's nominal GDP in 2023, marking a significant increase from the previous year. The government debt-to-GDP ratio reached 89 percent in 2022, highlighting the challenges of managing fiscal responsibilities.

Real effective exchange rates, a comprehensive measurement, declined from 88 in 2022 to 72 percent in 2023, reflecting the economic challenges faced by Pakistan.

The World Economic Situation and Prospects report for 2024 presents a nuanced perspective on Pakistan's economic trajectory, balancing modest growth projections with a range of challenges, including inflationary pressures, currency depreciation, and high levels of sovereign debt.