UN forecasts modest economic growth for Pakistan in 2024 and 2025

WEB DESK: In its latest report titled ‘World Economic Situation and Prospects (WESP) 2024,’ the United Nations (UN) anticipates a “modest economic growth” of 2 per cent for Pakistan in the year 2024, with a slight improvement to 2.4 per cent projected for 2025.

The report, released on Friday, outlined key economic indicators for the region.

According to the UN, the GDP growth projections for Sri Lanka and Pakistan stand at 1.5 per cent and 2 per cent, respectively, for the year 2024. Notably, Pakistan’s economy exhibited a growth of 1.7 per cent in the preceding year of 2023.

The broader perspective for South Asia reveals a robust growth projection of 5.2 per cent in 2024, slightly lower than the estimated 5.3 per cent growth in 2023.

However, challenges such as higher interest rates affecting investment and weakened global demand impacting export growth persist, as outlined in the report.

Tight financial conditions, coupled with fiscal and external imbalances, are expected to continue exerting pressure on South Asian economies in the short term.

The report highlights that geopolitical tensions, including the ongoing conflict in Ukraine and Western Asia, pose additional risks, particularly for net-oil-importing countries in the region.

Global economic growth is projected to decelerate from an estimated 2.7 per cent in 2023 to 2.4 per cent in 2024, falling below the pre-pandemic growth rate of 3.0 per cent, according to the UN report.

Climate-change-related events in 2023, including intensified droughts and above-average rainfall, have adversely affected the region, with countries heavily reliant on agriculture likely to face severe consequences.

The report sheds light on Pakistan’s recent economic developments, including the initiation of a standby arrangement with the International Monetary Fund (IMF) in June 2023, amounting to $3 billion.

The IMF programme aims to stabilise the economy, bolster foreign exchange reserves, and facilitate fiscal adjustment while safeguarding essential social spending.

Furthermore, the report projects a downward trajectory for inflation in Pakistan. The consumer price index (CPI)-based inflation, which reached 30.3 per cent in 2023, is expected to decrease to 19.1 per cent in 2024 and 10.4 per cent in 2025.

Meanwhile, global inflation is anticipated to decline from 5.7 per cent in 2023 to 3.9 per cent in 2024, though risks remain, particularly in the face of geopolitical conflicts that could potentially reignite inflationary pressures.

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