Pakistan Economic Forecast

Pakistan Economic Outlook

November 17, 2020

The economy likely recovered in Q1 of this fiscal year—which began in July 2020—after GDP growth slowed significantly in FY 2020 (July 2019–June 2020) due to lockdown measures imposed at the tail end of the year. In July–September, industrial production rebounded, mainly due to healthier manufacturing activity. Moreover, average remittances growth surged in the quarter, which, coupled with easing containment measures, should have boosted private spending. Turning to Q2 (October–December) economic conditions are likely continuing to improve. In October, merchandise exports expanded modestly year-on-year, while imports continued to contract, leading to a notable improvement in the trade deficit. However, an uptick in new Covid-19 cases prompted a snap-back of some restrictions in mid-November, which should be weighing on activity somewhat; that said, a full lockdown is unlikely in the coming months.

Pakistan Economic Growth

The economy should rebound in FY 2021 as the impact of the pandemic gradually fades and domestic demand recovers. Moreover, structural reforms should boost investment, while foreign demand is expected to pick up in tandem with the global economic recovery. However, mounting debt, uncertainty over the evolution of the virus and geopolitical tensions cloud the outlook. FocusEconomics panelists project growth of 1.5% in FY 2021, which is down 0.1 percentage points from last month’s estimate, and 4.0% in FY 2022.

Pakistan Economy Data

2015 2016 2017 2018 2019
Population (million)190194197201205
GDP per capita (USD)1,4261,4401,5451,5661,360
GDP (USD bn)271279305315278
Economic Growth (GDP, annual variation in %)4.75.55.65.81.0
Consumption (annual variation in %)2.97.68.56.23.0
Investment (annual variation in %)15.87.510.311.2-12.8
Industrial Production (annual variation in %)5.25.74.64.6-2.3
Unemployment Rate5.96.06.05.7-  
Fiscal Balance (% of GDP)-5.3-4.6-5.8-6.6-8.9
Public Debt (% of GDP)61.865.565.169.983.7
Money (annual variation in %)12.814.513.99.510.8
Inflation Rate (CPI, annual variation in %, eop)3.23.75.45.412.7
Inflation Rate (CPI, annual variation in %)2.53.84.35.39.4
Exchange Rate (vs USD)104.9104.4110.7139.8155.0
Policy Interest Rate (%)6.505.755.756.5012.25
Exchange Rate (vs USD, aop)102.8104.7105.3121.7150.4
Current Account (% of GDP)-1.0-1.7-4.1-6.3-4.9
Current Account Balance (USD bn)-2.8-4.9-12.6-19.9-13.5
Trade Balance (USD billion)-17.3-19.1-26.0-30.9-27.6
Exports (USD billion)24.122.022.024.824.3
Imports (USD billion)41.441.148.055.751.9
Exports (annual variation in %)-3.9-8.80.212.6-2.1
Imports (annual variation in %)-0.8-0.616.716.0-6.8
International Reserves (USD)16.020.918.712.410.2
External Debt (% of GDP)24.126.527.430.338.2

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Pakistan Facts

Value Change Date
Bond Yield11.000.0 %Jan 01
Exchange Rate154.9-0.05 %Jan 01

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