IMF Maintains Pakistan’s GDP Growth Projection at 3.5% for FY25

The International Monetary Fund (IMF) has maintained Pakistan’s GDP growth rate projection at 3.5 percent for the fiscal year 2025. The Fund in its latest report ‘World Economic Outlook (WEO) update: The Global Economy in a Sticky Spot” released on Tuesday noted that Pakistan’s GDP is projected to be 3.5 percent in the fiscal year 2025 against 2 percent in 2024. The Fund had the same GDP projection for Pakistan in WEO released in April 2024. The World Bank has projected Pakistan’s GDP growth rate at 2.3 percent for fiscal year 2024-25 against the government projection of 3.6 percent. The Fund has stated that global growth is projected to align with the April 2024 WEO forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. However, varied momentum in activity at the turn of the year has somewhat narrowed the output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential. Services price inflation is holding up progress on disinflation, which is complicating monetary policy normalization. Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty, said the IMF. To manage these risks and preserve growth, the policy mix should be sequenced carefully to achieve price stability and replenish diminished buffers. Global activity and world trade firmed up at the turn of the year, with trade spurred by strong exports from Asia, particularly in the technology sector, the Fund added.