UN Forecasts 2% Economic Growth for Pakistan in 2024
In Sri Lanka and Pakistan, modest economic growth is expected, with GDP projected to expand by 1.5% in the former and 2% in the latter in 2024.
Karobar
The United Nations (UN) anticipates a "modest economic growth" of 2% in Pakistan for the year 2024, with a further improvement to 2.4% expected in 2025, according to the latest report titled 'World Economic Situation and Prospects (WESP) 2024' released by the UN on Friday.
In the preceding year, the Pakistani economy saw a growth of 1.7%, as reported by the same UN document.
The report indicates that South Asia's growth is forecasted to remain robust at 5.2% in 2024, slightly lower than the 5.3% growth estimated for 2023. However, challenges such as higher interest rates impacting investment and weaker global demand affecting export growth are expected. Additionally, tight financial conditions, fiscal imbalances, and external challenges are likely to influence South Asian growth in the near term.
The report emphasizes that global economic growth is expected to slow from an estimated 2.7% in 2023 to 2.4% in 2024, falling below the pre-pandemic growth rate of 3.0%.
The document highlights the adverse impact of climate-change-related events in the region, citing intensified droughts in July and August affecting India, Nepal, and Bangladesh. Pakistan, on the other hand, experienced above-average rainfall during the same period.
It warns that such climate-related shocks may disproportionately affect countries where agriculture plays a significant role in the GDP, potentially leading to increased food prices and heightened food insecurity pressures.
Notably, the report reveals that Pakistan entered into a Stand-by Arrangement with the International Monetary Fund (IMF) worth $3 billion in June 2023. The IMF program is anticipated to stabilize the economy, boost foreign exchange reserves, and facilitate fiscal adjustments while safeguarding essential social spending.
Furthermore, the report projects a decline in the inflation rate for Pakistan in the coming years. The consumer price index (CPI)-based inflation, which stood at 30.3% in 2023, is expected to decrease to 19.1% in 2024 and further down to 10.4% in 2025.
Global inflation is also projected to decrease from 5.7% in 2023 to 3.9% in 2024. However, the report cautions that elevated price pressures in various countries and potential geopolitical conflicts could lead to renewed increases in inflation.
