Pakistan flag Pakistan: Economic outline

Economic Outline

Economic Indicators

Pakistan has achieved steady growth since 2013 in the aftermath of a credit facility agreement with the IMF. Economic growth slowed in recent years due to measures taken by the authorities to address macroeconomic imbalances and turned negative in the aftermath of the COVID-19 pandemic. According to the IMF's estimates, growth picked up in 2022 reaching 6% of GDP, but it turned negative again in 2023 (-0.5%), due to the efforts to stabilize the economy through tackling fiscal and external imbalances and to a contraction in private consumption caused by the loss of income of rural populations amid floods that devastated the agricultural sector and by rising inflation. The IMF has revised down Pakistan's growth estimate for fiscal year 2024 to 2%, followed by 3.5% in 2025.

Concerning public finances, Fitch Ratings anticipates that the consolidated general government fiscal deficit will decrease to 6.8% of GDP in FY24, down from an estimated 7.8% in FY23. This improvement is fueled by a shift in the primary balance to a surplus of 0.3% of GDP, compared to a primary deficit of 0.8% of GDP in FY23. The fiscal balance is being bolstered by factors such as inflation, new revenue measures, and enhanced discipline concerning tax exemptions, subsidies, and other expenditures, including those at the provincial level. The public debt-to-GDP ratio stood at 76.6% in 2023 and should decrease marginally this year (72.2%) and in 2025 (70.4% - IMF). Overall, Pakistan's debt dynamics remain stable due to robust nominal growth over the medium term, wherein high inflation acts to counterbalance the strain from elevated domestic interest costs. Pakistan experienced its highest-ever inflation in 2023, estimated at 29.2%. It should remain high over the forecast horizon (around 23.6% in 2024 and 12.2% the following year), as per the IMF. In July 2023, the IMF disbursed USD 1.2 billion, followed by an additional USD 700 million after the approval of a staff-level agreement in January 2024. This leaves USD 1.1 billion to be disbursed pending a review scheduled for March 2024.

Pakistan's unemployment rate stood increased to 8.5% in 2023 (from 6.2% the previous year) and is expected to decrease to 8% and 7.5% in 2024 and 2025, respectively. Nevertheless, the number of people no longer actively seeking work is increasing. The level of underemployment remains very high, and much of the economy is informal. While the poverty rate has fallen by 40% over the last two decades, it is still high: using the lower-middle-income poverty rate of USD 3.65 per day, in fact, the World Bank calculated that Pakistan's poverty ratio stands at around 39.4%, with over 12.5 million Pakistanis falling below the poverty line in one year. The country has a low GDP per capita (PPP), estimated at USD 6,437 in 2022 by the World Bank (latest data available).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 374.66340.640.000.000.00
GDP (Constant Prices, Annual % Change) 6.1-0.52.53.64.5
GDP per Capita (USD) 1,6501,471000
General Government Gross Debt (in % of GDP) 76.276.672.270.468.3
Inflation Rate (%) n/a29.223.612.27.9
Unemployment Rate (% of the Labour Force) 6.28.58.07.56.5
Current Account (billions USD) -17.48-2.390.000.000.00
Current Account (in % of GDP) -4.7-0.7-1.8-1.6-1.6

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Pakistani Rupee (PKR) - Average Annual Exchange Rate For 1 GBP 141.46135.72162.53170.63202.88

Source: World Bank, 2015

 

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Latest Update: May 2024

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