Disappointing report from Bloomberg over Pakistan economic outlook
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In the latest survey conducted by Bloomberg between October 4 and 6, Pakistan's economic outlook for the fiscal year 2024 appears subdued. The Gross Domestic Product (GDP) growth rate is expected to expand by a modest 2.4 per cent, which reflects a significant slowdown compared to the previous estimate of 3.5 per cent in Bloomberg's prior survey.
Looking ahead to 2025, there is a slightly more optimistic projection, with the GDP expected to grow by 3.7 per cent year-on-year. However, amidst these numbers, there are concerning indicators. Inflation is anticipated to remain high, with the Consumer Price Index (CPI) forecast to increase by 28.14 per cent year-on-year in the fourth quarter of 2023, a sharp rise from the earlier estimate of 21.39 per cent for the same period.
This trend is expected to persist into the first quarter of 2024, with the CPI projected at 22.85 per cent year-on-year, considerably higher than the previous estimate of 15.43 per cent. These figures highlight the challenges facing Pakistan's economic stability.
The survey also revealed that the State Bank of Pakistan (SBP) is likely to maintain the 23 per cent discount rate until the end of the fourth quarter of 2023. Additionally, the target policy rate, presently at 22 per cent, is anticipated to remain unchanged during this period.
Economists, including Andrew Vogel from S&P Global, have expressed concerns about Pakistan's economic fragility, even in light of the recent IMF agreement. Vogel said that despite the agreement, Pakistan's economy remains weak, with a high risk of recession. He suggested that stabilisation in political conditions could pave the way for substantial improvements in financing and overall economic conditions.
