According to the IMF’s World Economic Outlook (WEO) Update, “inflation peaking despite sluggish growth,” Pakistan’s GDP is expected to expand by 2% in 2023 and 4% in 2024. The impact of the floods was not factored into the IMF WEO report, which predicted Pakistan’s GDP growth rate would be 3.5 percent in 2023 compared to 6 percent in 2022. The World Bank forecasts a 2% GDP growth rate for Pakistan in the fiscal year 2022–2023.
According to the Fund, the predicted rate of global growth will drop from an estimated 3.4 percent in 2022 to 2.9 percent in 2023 before increasing to 3.1 percent in 2024. The prediction for 2023 is 0.2 percentage points higher than that of the World Economic Outlook (WEO) for October 2022, but it is still below the historical average (2000–19) of 3.8 percent. Russia’s war in Ukraine and the increase in central bank rates to combat inflation continue to have a negative impact on economic growth.
Growth was slowed in 2022 by the quick spread of COVID-19 in China, but the recent reopening has made it possible for a quicker-than-anticipated comeback. Global inflation is anticipated to decrease from 8.8% in 2022 to 6.60% in 2023 and 4.30% in 2024, remaining above pre-pandemic levels (2017–19) levels of about 3.5%.
Although adverse risks have abated since the October 2022 WEO, the balance of risks is still heavily skewed to the downside. On the plus side, it’s possible for pent-up demand in certain economies to provide a larger boost or for inflation to decline more quickly. The recovery may be slowed down by China’s poor health results, the war in Ukraine by Russia may deteriorate, and debt distress may get worse due to higher global finance costs. Additionally, financial markets may abruptly reprioritize in response to unfavourable inflation news, and increasing geopolitical fragmentation may impede economic growth.
Broad-based fiscal relief measures should be discontinued, and financial assistance should be properly targeted at those who are most impacted by the higher prices of food and energy. To safeguard the benefits of the rules-based global system and to reduce greenhouse gas emissions and increase green investment, stronger multilateral cooperation is required.
