ISLAMABAD: The International Monetary Fund (IMF) announced on Tuesday Pakistan’s economic growth is projected to hit 2.5 percent this fiscal year, citing global factors such as high inflation and sluggish recovery in its latest World Economic Outlook report.

In recent years, Pakistan has faced severe economic challenges that have been exacerbated by the COVID-19 pandemic and last year’s monsoon floods that led to losses exceeding $30 billion in destroyed homes, farmlands, and public infrastructure.

Additionally, the country saw a significant decline in its foreign currency reserves and a depreciation of its national currency.

To avert the high likelihood of a sovereign debt default, Pakistan secured a crucial nine-month, $3 billion agreement with the IMF in July. However, this deal led to spikes in inflation due to the stringent economic reforms recommended by the international lender.

“Monetary policy actions and frameworks are key at the current juncture to keep inflation expectations anchored,” the IMF noted in its report.

Data presented in the report indicated a significant economic growth jump from -0.5 percent to 2.5 percent in Pakistan this fiscal year, with projections increasing to 5 percent by 2028.

The IMF also expects an unemployment rate of 8.5 percent this year, decreasing to 8 percent by 2024.

Inflation is projected to reach 29.4 percent in 2023, although it’s expected to ease to 17.5 percent the following year.

“The global recovery from the COVID-19 pandemic and Russia’s invasion of Ukraine remains slow and uneven,” the report said at the outset. “Despite economic resilience earlier this year, with a reopening rebound and progress in reducing inflation from last year’s peaks, it is too soon to take comfort.”