The International Monetary Fund (IMF) has maintained its projection for Pakistan’s GDP growth rate at 3.5 percent for the fiscal year 2025.
In its latest report, “World Economic Outlook (WEO) Update: The Global Economy in a Sticky Spot,” released on Tuesday, the IMF noted that Pakistan’s GDP is expected to grow by 3.5 percent in FY25, up from 2 percent in FY24. This projection aligns with the IMF’s April 2024 WEO forecast.
The World Bank, however, has a more conservative outlook, projecting Pakistan’s GDP growth rate at 2.3 percent for FY24-25, compared to the Pakistani government’s estimate of 3.6 percent.
The IMF report states that global growth is expected to align with the April 2024 WEO forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. The report highlights that varied momentum in economic activity has narrowed output divergence across economies as cyclical factors wane and activity aligns more closely with potential.
Inflation in services prices is complicating the progress on disinflation, making monetary policy normalization challenging. The IMF warns that the risks of inflation have increased, potentially leading to higher-for-longer interest rates amid escalating trade tensions and policy uncertainty.
To manage these risks and sustain growth, the policy mix should be carefully sequenced to achieve price stability and replenish diminished buffers. The report also notes that global activity and world trade firmed up at the start of the year, driven by strong exports from Asia, particularly in the technology sector.
