Pakistan’s economy is set to gain momentum, as the International Monetary Fund (IMF) projects a GDP growth rate of 3.2% for the fiscal year 2025, benefiting from a reduction in inflationary pressures. This growth is expected to slightly improve the unemployment rate, providing a modest positive effect on job creation.
The IMF further forecasts that Pakistan’s GDP growth could increase to 4.2% by fiscal year 2029. However, this suggests that even after the completion of the 37-month Extended Fund Facility (EFF) program, the country may continue to experience relatively low growth. Given the population growth rate of 2.55%, the predicted economic expansion may not be sufficient to significantly boost employment or alleviate poverty in the medium term.
This raises concerns about the long-term benefits of the IMF program under these conditions. According to the IMF’s 2024 World Economic Outlook (WEO) report, released during the IMF/World Bank annual meetings in Washington, D.C., Pakistan’s unemployment rate is forecast to decrease slightly, falling to 8% in FY2025 from 8.5% in FY2024.
The current account deficit is expected to be around 0.9% of GDP for FY2025, compared to 0.2% in FY2024 and 1% in FY2023. Although efforts to curb imports have helped reduce the current account deficit, they have also slowed real growth rates. However, the exchange rate has remained stable due to these measures.
Pakistan’s economic policymakers must aim for a more sustainable growth rate above 5%, while managing both current account and fiscal deficits to avoid the boom-and-bust cycles that have hampered progress in the past. Meanwhile, the IMF expects steady but slow global growth, forecasting a 3.1% rate by 2029, well below pre-pandemic levels. The global outlook calls for continued policy adjustments to address economic challenges and promote stability, particularly in light of ongoing inflationary pressures.
