The International Monetary Fund (IMF) has projected GDP growth rate for Pakistan at 1 percent for 2021 against -0.4 percent in 2020. The IMF World Economic Outlook (WEO) report “A long and difficult Ascent,” projected a rise in unemployment ratio for Pakistan from 4.5 percent in 2020 to 5.1 percent in 2021.
Furthermore, the Washington-based lending agency projected the economic growth rate recovering to 5pc of GDP by 2025. It said the rate of inflation would be peaking at 10.2pc at the end of FY2021. The IMF estimated current account deficit rising from 1.1pc of GDP in FY2020 to 2.5pc in FY2021 and then going up to 2.7pc in FY2025.
The WEO projected global growth at -4.4pc in 2020 — 0.8 percentage point above the June 2020 forecast. It said the stronger projection for 2020 compared with the June 2020 estimates reflected the net effect of two competing factors: the upward impetus from better-than-anticipated second quarter GDP outturns (mostly in advanced economies) versus the downdraft from persistent social distancing and stalled re-openings in the second half of the year.
The WEO noted that remittance flows contracted sharply during the early lockdown period but had shown signs of recovery. “Nonetheless, the risk of a decline in payments and transfers from migrant workers back to their home countries is very significant, particularly for such countries as Bangladesh, Egypt, Guatemala, Pakistan, the Philippines, and those in sub-Saharan Africa more broadly,” said IMF Economic Counsellor and Director of Research Gita Gopinath.
More generally, the IMF said the global economy was climbing out from the depths to which it had plummeted during the ‘great lockdown’ in April. But with the Covid-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.
The IMF advised the governments, where possible, to continue to support viable but still vulnerable firms with moratoria on debt service and equity-like support to preserve jobs. Over time, once the recovery has taken a strong hold, policies should shift gradually to facilitating reallocation of workers from sectors likely to shrink on a long-term basis (travel) to growing sectors (e-commerce).
According to Business Recorder, the risk of a decline in payments and transfers from migrant workers back to their home countries is very significant, particularly for such countries as Bangladesh, Egypt, Guatemala, Pakistan, the Philippines, and those in sub-Saharan Africa more broadly.