GDP Growth Outlook
The International Monetary Fund (IMF) has lowered Pakistan’s GDP growth forecast for FY2024–25 to 2.6%, down from 3.2% projected in October 2023, citing weak crop output, subdued industrial activity in the first half of the fiscal year, and global economic uncertainties.
Quarterly Performance
- Q1 FY2024: GDP growth at 1.3%, impacted by poor Kharif crop yields and low industrial output.
- Q2 FY2024: GDP growth at 1.7%, reflecting continued agricultural and industrial challenges.
Fiscal Expenditure
- Current Expenditure: Remains steady at 18.9% of GDP for FY2024, as per the IMF’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) program.
- Projected Decline: Expected to decrease to 17.8% of GDP in FY2025–26.
Public Sector Development Program (PSDP)
- Revised Allocation: Increased from 2.3% to 2.5% of GDP for FY2024.
- Concerns: The IMF noted weak disbursements from the Planning Ministry, potentially hindering development progress.
Privatisation Proceeds
- Forecast: Zero percent of GDP for FY2024 and the next four years, indicating no significant privatisation revenue.
Inflation୍
System: Inflation Trends
- March 2025: Year-on-year inflation dropped to 0.7%, driven by tight monetary policies and lower food and energy prices.
- Core Inflation: Remains elevated at approximately 9%.
- Outlook: Inflation for FY25 revised downward but expected to rise temporarily before stabilizing at 5–7% in FY26.
Current Account Deficit (CAD)
- FY25 Projection: $0.2 billion (0.1% of GDP), supported by stable exports and rising remittances amid foreign exchange stability.
- Medium-Term Outlook: Expected to increase to 1% of GDP as imports recover.
International Reserves
- Growth: Gross international reserves projected to rise, supported by multilateral and bilateral inflows, including $1.3 billion in expected RSF disbursements.
- External Financing: Limited access to commercial financing, with a small Panda bond planned for FY26 and a gradual return to global markets in FY27.
Trade Projections
- Exports: Revised down to $31.305 billion for FY25, from $31.751 billion.
- Imports: Increased to $57.634 billion, up from $57.180 billion.
