IMF Slashes Pakistan's Growth Forecast, Warns of Global Economic Risks

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