Global lender warns of persisting risks to economies of various countries due to COVID-19 shocks and reiterates calls for vaccine equity
The International Monetary Fund (IMF) on Tuesday forecast Pakistan’s GDP growth at 4 percent for the 2021-22 fiscal year, in line with an Asian Development Bank projection from September.
Last month, the ADB had projected Pakistan’s GDP to reach 4% in 2021-22, significantly higher than the 3.4 percent forecast by the World Bank, which the government has rejected as “unrealistic” and not based on facts. Endorsing Islamabad’s provisional figures of 3.9 percent GDP growth during the previous fiscal year 2020-21, the IMF’s World Economic Outlook 2021 report said it expected Pakistan’s unemployment rate to decline from 5 percent to 4.8 percent in the current fiscal.
It said that during the current fiscal, Pakistan’s average rate of inflation was expected to equal 8.5%, while its current account deficit would stabilize around 3.1% of GDP, up from the 0.6% posted the previous year. However, it warned, inflation was expected to hit 9.2% by the end of the next year.
The IMF also predicted the Consumer Price Index to gradually reduce to 6.5% by FY2026.
Globally, the IMF has projected growth to hit 5.9% in 2021 and 4.9% in 2022 on the basis of increasing risks to the global economy and complex policy trade-offs. In a statement, IMF chief economist Gita Gopinath warned the risks to economic prospects had increased and policy trade-offs become more complex. “Compared to our July forecast, the global growth projection for 2021 has been revised down marginally to 5.9% and is unchanged for 2022 at 4.9%,” she said, noting that the minor global downgrade reflected massive downgrades for some countries. “The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics,” she added.
Urging the world to work toward vaccine equity to avoid a reduction to the global GDP over the next five years, Gopinath said this was essential to secure better economic prospects for all. “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,” the report added.