IMF projects Pakistan growth rate at 1.5% for current fiscal, up from last year

ISLAMABAD: The International Monetary Fund (IMF) has projected a GDP growth rate of 1.5 percent for Pakistan for the current fiscal year 2020-21, compared to the negative 0.4 percent projection for the previous fiscal year 2019-20, in the Economic Outlook for 2021 released this week.
On the other hand, the Pakistan government has projected a GDP growth rate target of 2.1 percent for the current fiscal 2020-2, expecting economic growth and an upwards trajectory as the COVID-19 pandemic winds down.
Before the advent of the coronavirus, the IMF had projected a GDP growth rate of positive 1.9 percent for Pakistan in the last fiscal year.
The IMF’s World Economic Outlook for 2021 shows the global economy is projected to grow at 5.5 percent, emerging economies at 8.3 percent and Africa at 3.2 percent. India is projected to grow at 11.5 percent, China 8.1 percent, Malaysia 7 percent, Turkey 6 percent, France 5.5 percent, USA 5.1 percent, Mexico 4.3 percent and Nigeria 1.5 percent.
Earlier this month, Pakistan’s central bank kept interest rates steady at 7%, indicating that it would keep them on hold in the near future as it seeks to balance economic headwinds from the COVID-19 pandemic with the need to curb inflation.
“The (Monetary Policy Committee) felt that the existing accommodative stance of monetary policy remained appropriate to support the nascent recovery while keeping inflation expectations well-anchored,” the State Bank of Pakistan said in a statement.
It is the third time that Pakistan has kept its main policy rate unchanged after cutting it by 625 basis points, down from 13.25%, at the time the global pandemic hit its economy last February.
The bank also provided guidance that it planned to keep interest rates unchanged “in the near term” in the absence of “unforeseen developments”, adding that any changes to interest rates as the economy recovered would have to be “measured and gradual”.
The result, which was largely in line with analysts’ expectations, was in part due to some domestic economic improvement with the bank saying there were upside risks to the projected 2% growth projected for the 2021 financial year, which ends in June.
The bank has also had to balance the need to provide stimulus throughout the coronavirus pandemic with tempering inflation.
Price hikes have hit consumers hard over the past year though inflation has eased since hitting a 5-year high of more than 9% late last year, with the country posting 8% consumer price inflation in December.