Pakistan’s short-term economic growth is favorable says IMF – Research Snipers

Pakistan’s short-term economic growth is favorable says IMF

After the discussions on Post-Program monitoring, the International Monetary Fund (IMF) executive board has concluded that Pakistan’s short-term economic growth is favorable for all stakeholders, the current economic situation of Pakistan 2018 is on the rise towards positive change.

According to the IMF forecast, Pakistan’s economic growth is broadly favorable, the real GDP is expected to grow by 5.6% in Financial year 2017/18 the growth is broadly supported by improved energy supply to the country and China-Pakistan Economic Corridor (CPEC) related projects, the investment poured into the CPEC projects would play a critical role in igniting economic growth, the ongoing recovery in agriculture sector is also playing a significant role in the growth, the inflation rate would remain under control. However, there are some risks as well, macroeconomic resilience can disrupt the growth.

IMF said, the fiscal slippages last year are still unprecedented, fiscal deficit is expected at 5.5% of the GDP during this year which could lead to higher deficit ahead of general elections 2018. Other few major problems are increasing imports, widening current account deficit and significant decline in foreign reserves and higher external financing.

IMF estimates that during the fiscal year 2017/18 current account deficit could reach 4.8% of GDP, Pakistan’s foreign reserves can also be declined due to limited exchange rate flexibility. Risks in Pakistan’s medium and long-term capacity to repay loans have increased due to increasing fiscal financing needs and declining reserves.

The Executive Board (IMF) has acknowledged Pakistan’s favorable growth momentum in short-term but show concerns in its medium-term and long-term macroeconomic situation. The external fiscal imbalances, declining foreign exchange reserves are the major problems.

Pakistan can improve its foreign reserves, current account deficit and the trade deficit with proper planning and policy towards improvement.