IMF forecasts drop in inflation and unemployment in Pakistan
The International Monetary Fund (IMF) forecasted Pakistan’s GDP growth prediction for 2021/22 at 4%, but warned that huge differences in Covid-19 vaccine access and policy support in many developing countries could obstruct their economic recovery.
The IMF affirmed Pakistan’s preliminary GDP growth rate of 3.9% for the preceding fiscal year 2020-21 in its recent report “World Economic Outlook October 2021,” which was released today.
According to the estimate, Pakistan’s unemployment rate will fall from 5.0% this fiscal year to 4.8% next fiscal year. Similarly, inflation would decline from 8.9% in 2020-21 to 8.5% by the conclusion of the current fiscal year 2021-22.
Furthermore, the IMF predicted that Pakistan’s current account deficit, which was 0.6 % last year, would rise to 3.1 % in FY2021-22.
The global economic recovery continues, according to the IMF, despite a resurgent pandemic that provided unique policy problems. Since the July forecast, the gap in predicted recovery times for different economic categories has expanded, for example, between advanced economies and low-income developing countries.
Analysts said Pakistan’s economy looked to have fared well in the aftermath of the pandemic, and the central bank indicated last month that the speed of recovery had exceeded predictions. As commercial activity gradually resumed in the second year of the Covid-19 epidemic, the Asian Development Bank expected Pakistan’s GDP to reach 4% in fiscal year 2021-22 (FY22).
The IMF lowered its global growth prediction for 2021 from 6.0 % to 5.9 % in its World Economic Outlook, down from 6.0 % in July. It maintained its 4.9 % global growth outlook for 2022. The IMF stated that “economic divergences are a consequence of large disparities in vaccine access and in policy support”.
“Emerging and developing economies, faced with tighter financing conditions and a greater risk of de-anchoring inflation expectations, are withdrawing policy support more quickly despite larger shortfalls in output.” In the current fiscal year, the administration set a goal of 5% GDP growth.
The global economic recovery is continuing, according to IMF chief economist Gita Gopinath, despite rising uncertainty and more complex policy trade-offs.