IMF Cuts Pakistan’s GDP Forecast to 2.6% With Exports Set to Fall

The International Monetary Fund (IMF) has cut Pakistan’s GDP growth forecast for FY2024–25 to 2.6 percent, down from 3.2 percent projected in October 2023 due to weak crop output, poor industrial activity in H1, and global uncertainty. In its latest review under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), the IMF said GDP grew just 1.3 percent in Q1 and 1.7 percent in Q2 of FY2024 due to poor Kharif crop yields and low industrial output. Current expenditure remains at 18.9 percent of GDP as per the program. For FY2025–26, it is projected to decline to 17.8 percent. The Public Sector Development Program (PSDP) has been revised upward from 2.3 to 2.5 percent of GDP, though the IMF flagged weak disbursements from the Planning Ministry. Privatisation proceeds are projected at zero percent of GDP for FY2024 and the following four years. Inflation fell to 0.7 percent year-on-year in March 2025, driven by tight policies and lower food and energy prices. Core inflation, however, remains high at around 9 percent. Inflation for FY25 has been revised down but is expected to rise temporarily before stabilising at 5–7 percent in FY26. The current account deficit for FY25 is projected at $0.2 billion (0.1 percent of GDP), supported by stable exports and rising remittances amid FX stability. Medium-term CAD is expected to spike to 1 percent of GDP as imports recover. Gross international reserves are projected to rise, backed by multilateral and bilateral inflows and $1.3 billion in expected RSF disbursements. Access to commercial external financing remains limited, with a small Panda bond planned for FY26 and a gradual return to global markets in FY27. Exports for FY25 have been revised down to $31.305 billion from $31.751 billion. Imports are now projected at $57.634 billion, up from the previous estimate of $57.180 billion.