Pakistani economy facing high inflation and stagnant growth says IMF

 Pakistani economy to grow at 1% while inflation could touch 10% this year

After the World Bank, now IMF has come up with a bleak prediction about Pakistani economic growth. According to IMF prediction Pakistani economy will grow only 1% in the current financial year. The 1% growth rate is less than half of the official target of 2.1% and broadly in line with the projections made by the World Bank.

The inflation may cross above 10% and rate of unemployment will further jump by the end of this fiscal year, revealed the World Economic Outlook (WEO) report that the International Monetary Fund released yesterday.

The WEO noted that inflation in Pakistan could be 10.2% on an annualised basis, which by 2025 is expected to remain around 8.6% and the unemployment rate, which till this fiscal year was 4.5% may further jump to 5.1%. The IMF projected over 13.3% increase in unemployment in Pakistan within a year.

The IMF report projections suggest that Pakistan is in stagflation – a condition in which the economic growth rate is slow while unemployment and prices of goods and services are high. But the economic managers of PTI government are not ready to accept that Pakistani economy is facing stagflation conditions. The PTI government has so far failed to control the prices and bring down the inflation.

The pace of inflation is skyrocketing at a time when the economic activity, both in the formal as well as informal sectors, is slowing down, which has made it difficult for the people to cope with the situation. There is double-digit food inflation in Pakistan due to shortage of essential food items.

The IMF report said that remittance flows contracted sharply during the early lockdown period but showed signs of recovery.

“The risk of a decline in payments and transfers from migrant workers back to their home countries is very significant, particularly for such countries as Bangladesh, Egypt, Guatemala, Pakistan, the Philippines,” according to the report.

                                                              R K Bhatti

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