IMF projects Pakistan's GDP growth to stand at 2.5% in current fiscal year.

ISLAMABAD -- The International Monetary Fund (IMF) has warned that stagflation in the country would persist and also lowered the GDP growth projection for the current fiscal year 2023-24, reported media.

The global lender, in its World Economic Outlook for 2023-24, estimated that the GDP growth rate of Pakistan would stand at 2.5% for the current fiscal compared to the government's 3.5% target.

Apart from the stagflation, the IMF has also warned that the unemployment rate will remain elevated at 8% in FY2024 against 8.5% in FY2023. The unemployment rate stood at 6.2% in FY2022. The IMF's data shows that the unemployment rate has increased in the last two fiscals.

The report also projected that the GDP growth rate turned into -0.5% in the last financial year 2022-23 under the PDM-led regime but then the government gave a provisional growth rate of 0.29% for the previous fiscal year. The IMF has projected that the country's GDP growth rate might rise to 5% by FY2028.

Under the IMF programme, the caretaker government will release the quarterly GDP growth figures under the $3 billion Stand-By Agreement (SBA) by the end of next month, so the finalised GDP growth figure would be turned into negative for the last financial year.

However, the CPI-based inflation-related projection would be elevated and estimated at 23.6% against the government's projection of 21.9% for the ongoing financial year.

A low growth rate paired up with higher inflation leads to stagflation which would in turn increase poverty and unemployment, raising fears that the vulnerable segments of society might plunge into the trap of severe poverty.

The CPI-based inflation was lowered by the IMF's World Economic Outlook; it is projected at 23.6% for the current fiscal against an earlier projection of 25.9% by the IMF staff in a report released last July.

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