Pakistan’s Growth Forecast Slashed to 2.6% by IMF

The International Monet Fund (IMF) has lowered Pakistan’s economic growth forecast to 2.6% for the current fiscal year, down from its earlier prediction of 3%. This change comes as part of a broader update to global economic projections, which have been affected by trade uncertainties, including those caused by US President Donald Trump’s tariff policies.

This revised forecast is well below the 3.6% growth target set by Pakistan’s government. However, for the next fiscal year, the IMF expects Pakistan’s economy to grow by 3.6%.

On a positive note, the IMF has improved its outlook for inflation in Pakistan, now expecting it to average 5.1% this year instead of nearly 10%. For the next fiscal year, inflation is projected to be around 7.7%.

The IMF has also given a better outlook for Pakistan’s current account deficit. It now expects the deficit to be only 0.1% of the country’s GDP this year, much lower than the earlier forecast of nearly 1%. In dollar terms, the deficit is now expected to be about $400 million instead of $3.7 billion. For next year, the deficit is projected at 0.4% of GDP.

More details about the revised projections will be released in the IMF’s staff-level report, which will come out after the IMF board approves the second loan installment next month.

Meanwhile, Finance Minister Muhammad Aurangzeb met with IMF Managing Director Kristalina rgieva in Washington. He thanked the IMF team for their support and for reaching an agreement on the first review under the Extended Fund Facility and a new deal under the Resilience and Sustainability Facility. He also invited rgieva to visit Pakistan.

Aurangzeb also met with a US Treasury official, Robert Kaproth, and discussed improvements in Pakistan’s economy and the government’s ongoing reforms in areas like taxes, energy, privatization, and debt management.

In an interview with Bloomberg, Aurangzeb said Pakistan is trying to increase trade with the US and remove barriers in order to deal with the high tariffs imposed by President Trump.