Friday, December 8, 2023

More inflation and unemployment in coming months: IMF warns Pakistan

International Monetary Fund (IMF) has projected Pakistan’s GDP growth rate at 3.5 percent and inflation at around 20 percent as post-pandemic aftershocks. The Russia-Ukraine war impact hit the cash-strapped country.

In the World Economic Outlook 2023, the US-based lender forecast Pakistan’s GDP growth with a disclaimer that the 2022 projections are based on information available as of the end of August. It does not include the impact of the recent floods.

The current account balance is projected at negative 2.5 percent for 2023 compared to negative 4.6 percent for 2022. Furthermore, It projected a rise in unemployment to 6.4 percent in 2023 compared to 6.2 percent in 2022. IMF revealed that inflation was the highest in recent times across the globe as most regions opted for stern measures. The weakest growth profile forecasted in the last 2 decades, except the acute phase of the Covid-19 pandemic.

Also, it warned that aggressive monetary tightening would be critical to avoid inflation de-anchoring as a result of households and businesses basing their wage and price expectations on their recent inflation experience. The projection comes as Islamabad needs help after its worst floods in years. Besides, its economy was already struggling with a balance of payments crisis, soaring debt, and skyrocketing inflation.

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