IMF cuts Pakistan growth forecast to 3.5 pc, raises inflation outlook
New Delhi, April 16
The International Monetary Fund lowered Pakistan's economic growth forecast to 3.5 per cent for the fiscal year 2026-27 and raised its inflation outlook, a report has said.
In its latest World Economic Outlook released during the Spring Meetings, the IMF cut down the growth projection from its earlier estimate of 4.1 per cent, citing the impact of the ongoing Middle East conflict, while warning that the global economy could face significant disruptions if the war escalates.
For the current fiscal year, the growth forecast has been retained at 3.6 per cent, broadly in line with projections by other global institutions, as per The Express Tribune report.
The global lender also raised Pakistan's inflation forecast to 8.4 per cent for the next fiscal year, up from 7 per cent estimated earlier.
For the ongoing fiscal year, inflation is now expected to come in at 7.2 per cent, higher than the previous projection of 6.3 per cent.
The elevated inflation outlook could put pressure on the country's central bank to maintain or tighten interest rates, as per the report.
The IMF further revised Pakistan's external outlook, more than doubling the current account deficit projection to 0.9 per cent of GDP, or roughly $5 billion, for the next fiscal year, while maintaining the estimate at 0.4 per cent for the current year.
The report noted that Pakistan remains particularly vulnerable to the Middle East conflict, as it sources nearly 90 per cent of its energy imports from the region.
Rising oil and gas prices, coupled with supply disruptions, are expected to strain the country's macroeconomic stability.
Beyond Pakistan, the IMF warned of broader risks to the global economy. Under its baseline scenario, global growth is projected at 3.1 per cent in 2026 and 3.2 per cent in 2027, lower than the recent average of around 3.4 per cent.
Global inflation is expected to rise to 4.4 per cent in 2026 before easing to 3.7 per cent in 2027, as per the report.
— IANS
Reader Comments
It's sad to see ordinary citizens suffer due to economic mismanagement and global conflicts. 90% energy imports from a conflict zone is a huge strategic vulnerability. This should be a lesson for all nations about diversifying energy sources. 🙏
While the news is about their economy, we must focus on our own growth and inflation targets. Global headwinds affect everyone. Let's hope the Middle East situation de-escalates soon for everyone's sake.
The doubling of the current account deficit projection is a red flag. It shows how quickly external balances can deteriorate. India's strong forex reserves position looks even more prudent in this context.
With respect, I think some Indian commentators are missing the point. This isn't just about "them vs us". Economic instability anywhere hurts trade and connectivity projects for the whole subcontinent. We need stable neighbors for our own prosperity.
The inflation forecast of 8.4% is brutal for salaried people and families. Basic necessities become unaffordable. It's a humanitarian issue beyond politics. Hope things improve for the sake of common citizens.
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