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Pakistan Economic Outlook

June 21, 2022

Economic conditions are deteriorating as FY 2022 (July 2021-June 2022) draws to a close. Rising commodity prices and a large fiscal deficit have inflated the import bill, putting the country on the verge of a balance of payments crisis. The currency has sunk to an all-time low, while international reserves have dwindled to barely two months import cover. The government faces a tricky balancing act: On the one hand, it needs to trim the budget deficit in order to gain access to IMF funds. This led it, as part of its new FY 2023 budget, to unveil new austerity measures in June, such as cuts to fuel subsidies. On the other hand, it wants to avoid exacerbating inflation, which could pull the rug out from under the economy—or even the government itself: Protests recently broke out over the rising cost of living and blackouts caused by fuel shortages.

Pakistan Economic Growth

GDP growth is set to slow in FY 2023 (July 2022–June 2023) after two years of above-average growth. A key factor to watch is the drag on activity from higher commodity prices. Two other key factors are the speed of fiscal consolidation and the stability of the governing coalition: Both will be necessary for the IMF deal needed to avoid a balance of payments crisis. FocusEconomics panelists project growth of 4.1% in FY 2023, which is down 0.3 percentage points from the previous month’s forecast. In FY 2024, our panel forecasts GDP growth of 4.7%.

Pakistan Economy Data

	2015	2016	2017	2018	2019
Population (million)	190	194	197	201	205
GDP per capita (USD)	1,426	1,440	1,545	1,566	1,360
GDP (USD bn)	271	279	305	315	278
Economic Growth (GDP, annual variation in %)	4.7	5.5	5.6	5.8	1.0
Consumption (annual variation in %)	2.9	7.6	8.5	6.2	3.0
Investment (annual variation in %)	15.8	7.5	10.3	11.2	-12.8
Industrial Production (annual variation in %)	5.2	5.7	4.6	4.6	-2.3
Unemployment Rate	5.9	6.0	6.0	5.7	-
Fiscal Balance (% of GDP)	-5.3	-4.6	-5.8	-6.6	-8.9
Public Debt (% of GDP)	61.8	65.5	65.1	69.9	83.7
Money (annual variation in %)	12.8	14.5	13.9	9.5	10.8
Inflation Rate (CPI, annual variation in %, eop)	3.2	3.7	5.4	5.4	12.7
Inflation Rate (CPI, annual variation in %)	2.5	3.8	4.3	5.3	9.4
Policy Interest Rate (%)	6.50	5.75	5.75	6.50	12.25
Exchange Rate (vs USD)	104.9	104.4	110.7	139.8	155.0
Exchange Rate (vs USD, aop)	102.8	104.7	105.3	121.7	150.4
Current Account (% of GDP)	-1.0	-1.7	-4.1	-6.3	-4.9
Current Account Balance (USD bn)	-2.8	-4.9	-12.6	-19.9	-13.5
Trade Balance (USD billion)	-17.3	-19.1	-26.0	-30.9	-27.6
Exports (USD billion)	24.1	22.0	22.0	24.8	24.3
Imports (USD billion)	41.4	41.1	48.0	55.7	51.9
Exports (annual variation in %)	-3.9	-8.8	0.2	12.6	-2.1
Imports (annual variation in %)	-0.8	-0.6	16.7	16.0	-6.8
International Reserves (USD)	16.0	20.9	18.7	12.4	10.2
External Debt (% of GDP)	24.1	26.5	27.4	30.3	38.2

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Pakistan Facts

	Value	Change	Date
Bond Yield	11.00	0.0 %	Jan 01
Exchange Rate	154.9	-0.05 %	Jan 01

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