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A currency broker stands near his booth, which is decorated with pictures of currency notes, while dealing with customers, along a road in Karachi on January 27, 2023. — Reuters
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The International Monetary Fund (IMF) has cut Pakistan’s gross domestic product (GDP) growth forecast for 2025 to 3 percent from the previous estimate of 3.2 percent in October 2024.
Meanwhile, according to the IMF’s “World Economic Outlook Update Global Growth: Divergent and Uncertain” report, the country’s GDP growth rate will remain at 4 percent in 2026.
The lender’s growth forecast is similar to that of the Asian Development Bank (ADB), which last month revised Pakistan’s growth rate to 3 percent for the fiscal year 2024-25 from the previous figure of 2.8 percent expected in September 2024. It was against
ADB, in its Asian Development Outlook (ADO) for December 2024, attributed the revised growth figures to greater economic stability that it said would support the recovery.
The lender also said a faster-than-expected easing of inflationary pressures should further support economic activity through a recovery in private investment and a more accommodative monetary policy, noting that the suspension of import administrative measures. Industrial production growth is expected to accelerate, with high investor confidence, and easy access to foreign exchange.
Meanwhile, the IMF in its latest report forecasts global growth at 3.3 percent in 2025 and 2026, below the historical average of 3.7 percent.
The Washington-based lender said the forecast for 2025 was “broadly unchanged due to upward revisions in the US offsetting downward revisions in other major economies”.
Regarding global inflation, it said it is expected to fall to 4.2 percent in 2025 and 3.5 percent in 2026.
However, noting that although disinflation continues around the world, the IMF said there are signs that progress is stalling in some countries and that inflation is continuing to rise in some cases.
“The global average of sequential core inflation has been just above 2% over the past few months”.
Highlighting the rise in economic policy uncertainty, the report states that “expectations of policy changes under newly elected governments in 2024 have shaped financial market prices in recent months” and that “Political instability in some Asian and European countries has shaken and injected markets. Additional uncertainty regarding stalled progress on fiscal and structural policies.”
Forecasting a 2.6 percent decline in energy commodity prices in 2025, the IMF said non-fuel prices are expected to rise by 2.5 percent due to bad weather affecting major producers.
Other economies.
The report said that GDP growth in the United States is expected to be 2.7 percent in 2025, 0.5 percent higher than the October forecast, and will shrink to 2.1 percent in 2026.
Meanwhile, in the euro area, it said “weaker-than-expected growth in late 2024, particularly in manufacturing, and growing political and policy uncertainty will see growth down 0.2 percentage points to 1% in 2025.” Sani explains”.
However, growth will pick up to 1.4% in 2026 due to stronger domestic demand and reduced uncertainty.
Growth in the United Kingdom is expected to be 1.6% for 2025 and 1.5% the following year.
China’s GDP growth is expected to be 4.6 percent in 2025 and 4.5 percent in 2026, according to the IMF’s forecast, the lender’s chief economist Pierre-Olivier Gorenchas said, stressing that the world’s second largest The largest economy needs to make domestic demand its main engine. Development
“The Chinese economy needs to shift to a more locally driven engine of growth,” said Gornchas.
India’s growth is likely to remain solid at 6.5 percent in both 2025 and 2026, as projected in October and projected.
– Additional input from writers
