IMF predicts 3.5% economic growth for Pakistan in FY25

The International Monetary Fund (IMF) projects Pakistan’s economy to grow by 3.5% in the fiscal year 2024-25 (FY25). 

This forecast is just below the Pakistani government’s target of 3.6% announced in the latest budget, amidst sluggish global economic activity.

According to Pakistan’s economic survey, the GDP growth for the fiscal year 2023-24 was only 2.4%, falling short of the 3.5% target set by the government. 

In its World Economic Outlook (WEO) update, the IMF warned of modest global growth over the next two years, with challenges including cooling activity in the US, a bottoming-out in Europe, and stronger consumption and exports in China. 

The IMF maintained its global GDP growth forecast for 2024 at 3.2% and slightly raised its 2025 forecast to 3.3%.

IMF Managing Director Kristalina Georgieva described the current economic projections as part of the “tepid twenties.” The US growth forecast for 2024 was reduced to 2.6% due to slower-than-expected consumption, while the 2025 forecast remains at 1.9%. 

The IMF increased its growth forecast for China to 5.0% for 2024, matching the Chinese government’s target, with a 2025 forecast raised to 4.5%.

The IMF highlighted persistent inflation risks and warned that prolonged high inflation could lead to sustained high interest rates, amplifying external, fiscal, and financial risks. The organisation also noted potential economic policy shifts due to upcoming elections, which could result in fiscal profligacy and increased protectionism.

The IMF advised policymakers to prioritise restoring price stability, gradually ease monetary policy, rebuild fiscal buffers depleted during the pandemic, and implement policies promoting trade and productivity growth.