Pakistan has informed the International Monetary Fund (IMF) that it expects the economy to grow by 3.1% in the current fiscal year, with a largely balanced current account supported by rising remittances.
As per reports, the government plans to continue its economic stabilisation policies into the next fiscal year while targeting a higher growth rate.
During a briefing to the IMF mission, the Ministry of Finance outlined its macroeconomic projections for 2024-25 and 2025-26, presenting a framework for steady economic expansion.
Officials indicated that next year’s economic growth target might be set at 4.5%, with inflation expected to remain at around 7%. However, these figures are subject to approval by the federal cabinet and the National Economic Council.
The current fiscal year’s projected 3.1% growth falls short of the official 3.6% target but aligns with estimates from international financial institutions. The Ministry of Finance anticipates that the services sector will be the primary driver of this growth, while the agriculture sector is expected to expand by only 1.3%.
However, the economy remains vulnerable to climate risks such as floods and droughts, which could disrupt agriculture, infrastructure, and overall economic stability.
Inflation for the ongoing fiscal year is forecasted to stay within the 6-7% range, significantly below the original 12% target. Factors contributing to this decline include a high base effect, a stable exchange rate, and controlled non-perishable food prices. The government expects inflation to follow a similar trajectory in the next fiscal year.
Despite these projections, economic activity was sluggish in the first quarter of 2024-25, with a growth rate of just 0.92%. The nominal GDP growth is expected to reach 11.5%, but analysts suggest it could remain in single digits if inflation and GDP growth fall below revised estimates. This could impact the Federal Board of Revenue’s (FBR) revenue collection, which is expected to be revised downward to Rs12.48 trillion. The FBR has already missed its eight-month target by Rs606 billion, collecting Rs7.34 trillion.
The government assured the IMF that Pakistan’s current account deficit would remain minimal, ranging from $130 million to $500 million—around 0.1% of GDP. This is a notable improvement from last year’s $1.7 billion deficit. However, authorities acknowledged that the balance has been maintained partly through restricted imports, as the country continues to face foreign currency shortages.
For the next fiscal year, the government expects the current account deficit to widen slightly to $3 billion, or 0.7% of GDP. This projection is based on improved exports, controlled imports, steady primary income, and robust workers’ remittances. The government estimated exports at $33 billion for this fiscal year, while imports are projected to reach $59 billion.
