The International Monetary Fund (IMF) has revised downward the GDP growth rate target for Pakistan from 2% to 1% for the next fiscal year 2020-21.
The IMF in April had estimated Pakistan’s GDP at -1.5 percent for the outgoing fiscal year 2020 and 2 percent for the fiscal year 2021.
IMF in its latest report ‘World Economic Outlook Update”, revised upward its forecast for the current fiscal 2020 to -0.4 percent against its earlier projection of -1.5%. However, for the next fiscal year the growth rate target has been revised downward to one percent compared to its earlier projection of 2%.
Global growth is projected at –4.9% in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4%.
Overall, this will leave 2021 GDP some 6½ percentage points lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s, the Fund added.
It further stated that as with the April 2020 WEO projections, there is a higher-than-usual degree of uncertainty around this forecast.
The baseline projection rests on key assumptions about the fallout from the pandemic. In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020; greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020; and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices.
For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity. Moreover, the forecast assumes that financial conditions—which have eased following the release of the April 2020 WEO—will remain broadly at current levels. Alternative outcomes to those in the baseline are clearly possible, and not just because of how the pandemic is evolving.