Global lender warns of persistent inflation, unemployment as government continues to claim that economy will exceed forecasts
The International Monetary Fund (IMF) on Tuesday backed the World Bank’s estimates in forecasting 1.5 percent economic growth for Pakistan in the current fiscal, even as the government continues to claim growth will “exceed” expectations.
Last week, the State Bank of Pakistan revised growth estimates and claimed that the country would witness 3 percent GDP growth this year—doubling the estimates of global institutions.
In the World Economic Outlook 2021 report, the IMF estimated that Pakistan would see 8.7 percent inflation; current account deficit of 1.5 percent of GDP; and unemployment rising by 0.5 to 5 percent. This is against the government’s estimates of 2.1 percent GDP growth; 6.5 percent inflation; and 1.6 percent current account deficit to GDP.
The IMF, however, has painted a rosier picture for Pakistan from the next fiscal (2021-2022). According to the global lender, Islamabad can expected economic growth at 4 percent of GDP next year, and 5 percent the year after that. It says inflation should also drop from 10.2 percent last year to 8 percent next year.
In contrast to the IMF estimates, Finance Minister Hammad Azhar on Tuesday claimed that Pakistan’s economy would “grow faster than forecast this year.” He claimed that Pakistan’s growth target for the next fiscal year would exceed 4 percent, adding that the government would enact programs to increase the tax net and combat tax evasion.
Claiming that the government was “confident of achieving our targets,” he claimed the current fiscal was “seeing a fantastic increase in revenue.” He stressed that economic production would grow on the basis of stability in Pakistan.