Pakistan’s GDP growth rate is expected to be 4% in 2022, up from 5.6 percent in 2021, while inflation is expected to jump from 8.9% in 2021 to 11.2 percent in 2022, according to the International Monetary Fund (IMF).Pakistan’s growth rate is expected to be 4%, according to the IMF
In its newest report, “World Economic Outlook (WEO), War pushes back global recovery,” the IMF forecasts GDP growth of 4% in 2022, down from 5.6 percent in 2021, and 4.2 percent in 2023.
Inflation is expected to rise from 8.9% in 2021 to 11.2 percent in 2022, before falling to 10.5 percent in 2023, according to the Fund.
Consumer prices are expected to rise by 12.7 percent in 2022 and 8.2 percent in 2023, according to the research, which is elaborated as (monthly year-over-year changes and, for certain nations, on a quarterly basis).
In 2022, the current account balance is expected to be -5.3 percent of GDP, up from -0.6 percent in 2021 and -4.1 percent in 2023.
Unemployment is expected to be 7% in 2022, down from 7.4% in 2021, and 6.7 percent in 2023, according to the IMF.
The war in Ukraine has caused an expensive humanitarian catastrophe, according to the study, which requires a peaceful end. The conflict’s economic consequences will cause a major slowdown in global economy in 2022.
Global growth is expected to drop from 6.1 percent in 2021 to 3.6 percent in 2022 and 2023, according to projections. This is 0.8 and 0.2 percentage points lower than the January World Economic Outlook Update for 2022 and 2023, respectively. Over the medium run, global growth is expected to slow to around 3.3 percent after 2023.
Importantly, this forecast assumes that the conflict in Ukraine remains contained within Ukraine, that additional sanctions against Russia do not affect the energy sector (although the impact of European countries’ decisions to wean themselves off Russian energy and embargoes announced through March 31, 2022 are factored into the baseline), and that the pandemic’s health and economic effects fade over the course of 2022.
Through 2026, employment and output will mostly stay below pre-pandemic levels, with a few exceptions. Scarring effects are projected to be substantially worse in emerging market and developing countries than in advanced economies, reflecting less governmental assistance and typically slower immunisation, with production expected to remain below the pre-pandemic average for the duration of the prediction period.
This forecast is surrounded by unusually high uncertainty, with downside risks to the global outlook dominating—including a possible worsening of the war, escalation of sanctions against Russia, a sharper-than-expected deceleration in China as Omicron tests a strict zero-COVID strategy, and a new, more virulent virus strain emerging.
War-related commodity price hikes and expanding pricing pressures are projected to keep inflation rising for longer than previously predicted. Inflation is expected to be 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies in 2022, respectively, up 1.8 and 2.8 percentage points from January projections.
Although the baseline prediction predicts a gradual resolution of supply-demand imbalances and a minor increase in labour supply, lowering price inflation over time, the forecast is once again clouded by uncertainty. The situation might quickly escalate.
Worsening supply-demand imbalances, especially those caused by the conflict, as well as future rises in commodity prices, might result in persistently high inflation, increased inflation expectations, and faster wage growth. If indicators of rising inflation in the long term emerge, central banks will be pushed to respond sooner than expected, hiking interest rates and exposing debt vulnerabilities, especially in developing countries.
In a separate report titled “Global Financial Stability, Shockwaves from the War in Ukraine Test the Financial System’s Resilience,” the IMF noted that sovereign debt holdings vary significantly across emerging markets, ranging from about 5% of banking sector assets (for example, in Chile and Peru) to more than 25%. (for example, in Brazil and Pakistan). In general, developing market banks’ exposure to government debt is increasing.