IMF lowers economic growth forecast for pakistan

The International Monetary Fund (IMF) on Wednesday forecast Pakistan’s growth rate to clock in at -0.4 per cent in the ongoing fiscal year before rising to 1pc in the next. 

The IMF’s June World Economic Outlook (WEO) projections were revised both ways — upwards and downwards — compared to those issued two months ago. In its April outlook, the fund had projected Pakistan’s economy to post negative growth of 1.5pc in FY2020, while estimating a 2pc growth rate in FY2021. 

However, given the severity of the pandemic, it projects the economy of Pakistan to shrink 0.4pc in FY2020 and grow 1pc in FY2021. 

The IMF released its projections in the World Economic Outlook, in which it said the impact Covid-19 on the global economy exceeds earlier expectations. It said the world’s GDP growth in the ongoing fiscal year will contract 4.9pc, undoing all of the gains booked since the 2007-08 financial crisis. 

It said the “COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4 percent.”

The global economy has entered in a recession as the demand slowdown caused by the pandemic has brought the economic activity to a standstill. The IMF, World Bank and other advisory bodies have all warned of unforeseen consequences from the pandemic on the global economy. 

Developing countries, especially in the Asian and African region will bear most of the brunt from these disruptions as global demand for exports has plummeted to new lows. 

The IMF called upon the world to increase cooperation on multiple fronts: liquidity assistance, cutting down trade barriers, collective health response and developing a global financial safety net. 

In its estimates, the IMF paints a bleak picture of the world’s developed economies. It forecasts the US economy to shrink 8pc in 2020, Euro Area -10.2pc, UK -10.5pc and Japan -5.8pc.

In the emerging economies, it said the Chinese economy will grow by 1pc — an outlier whereas that of India will shrink by 4.5pc.