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Pakistan Economic Forecast

Pakistan Economic Outlook

GDP grew just 0.3% in the last fiscal year (July 2022–June 2023). Activity was blunted by floods, government austerity and a balance-of-payments crisis. Turning to the present fiscal year, the economy seems to be heading toward recovery. The government secured a USD 3 billion bailout with the IMF in July, avoiding an impending default, rebuilding international reserves and unlocking further funding from other creditors. That said, to secure the bailout, the government was forced to cut subsidies for electricity and fuel. This has likely kept economic activity weak, along with a dollar shortage caused by stringent FX controls. Merchandise imports slumped 26% year on year in July–August, suggesting tepid consumer demand, and business activity continued to worsen in July, according to PMI data. In addition, business and consumer sentiment remained pessimistic in July.

Pakistan Inflation

Inflation fell to 27.4% in August (July: 28.3%). Inflation should soften from current levels later in CY 2023 and in CY 2024 on a tougher base effect. Nonetheless, the past removal of some currency controls and fuel subsidies will keep inflation far above its 10-year average of 8.0%. Key upside risks include El Niño, currency weakness and rising oil prices.

This chart displays Economic Growth (GDP, annual variation in %) for Pakistan from 2014 to 2023.

Pakistan Economic Data

2018 2019 2020 2021 2022
Population (million) 210 214 218 223 227
GDP (USD bn) 357 322 301 349 375
GDP per capita (USD) 1,700 1,506 1,377 1,567 1,653
GDP (PKR bn) 39,190 43,798 47,540 55,836 66,624
Economic Growth (Nominal GDP, ann. var. %) 10.2 11.8 8.5 17.5 19.3
Economic Growth (GDP, ann. var. %) 6.2 2.5 -1.3 6.5 6.2
Domestic Demand (ann. var. %) 7.4 2.5 -2.3 8.0 5.9
Private Consumption (ann. var. %) 7.2 5.6 -2.9 9.5 6.8
Government Consumption (ann. var. %) 5.5 -1.6 8.5 1.8 -1.3
Fixed Investment (ann. var. %) 10.3 -11.1 -6.7 3.7 5.7
Exports (G&S, ann. var. %) 10.0 13.2 1.5 6.5 5.9
Imports (G&S, ann. var. %) 15.7 7.6 -5.1 14.5 11.0
Industrial Production (ann. var. %) 9.2 0.2 -5.7 7.8 7.2
Unemployment (% of active population, aop) 5.8 6.9 6.6 6.3 -
Fiscal Balance (% of GDP) -5.8 -7.9 -7.1 -6.1 -7.9
Public Debt (% of GDP) 64.8 77.5 79.6 73.6 -
Inflation (CPI, ann. var. %, eop) 5.4 12.6 8.0 12.3 24.5
Inflation (CPI, ann. var. %, aop) 5.8 9.4 9.5 9.5 19.9
Policy Rate (%, eop) 10.00 13.25 7.00 9.75 16.00
Exchange Rate (PKR per USD, eop) 139 155 160 177 226
Exchange Rate (PKR per USD, aop) 122 150 162 163 205
Current Account Balance (USD bn) -19.2 -13.4 -4.4 -2.8 -17.5
Current Account Balance (% of GDP) -5.4 -4.2 -1.5 -0.8 -4.7
Merchandise Trade Balance (USD bn) -30.9 -27.6 -21.1 -28.6 -39.1
Merchandise Exports (USD bn) 24.8 24.3 22.5 25.6 32.5
Merchandise Imports (USD bn) 55.7 51.9 43.6 54.3 71.5
Merchandise Exports (ann. var. %) 12.6 -2.1 -7.1 13.8 26.7
Merchandise Imports (ann. var. %) 16.0 -6.8 -15.9 24.4 31.8
Foreign Direct Investment (USD bn) 1.7 2.2 2.1 2.1 1.3
International Reserves (USD bn) 11.3 16.0 18.6 22.7 9.8
International Reserves (months of imports) 2.4 3.7 5.1 5.0 1.6
External Debt (USD bn) 95.2 106.3 113.0 122.3 130.3
External Debt (% of GDP) 26.7 33.0 37.6 35.1 34.7

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