ISLAMABAD: According to the most recent United Nations economic survey, Pakistan’s economy is still recovering from the 2022–2023 downturn. The country’s GDP is predicted to expand by 3.4 percent in FY25, indicating a slight expansion in economic activity.
According to the United Nations Department of Economic and Social Affairs’ (DESA) World Economic Situation and Prospects 2025, which Dawn was given access to on Friday, the International Monetary Fund’s larger program for Pakistan, a $7 billion, 37-month Extended Fund Facility (EFF), builds on the progress made under the 2023 EFF and emphasizes longer-term structural reforms.
The EFF seeks to assist Pakistan in resolving structural issues, reestablishing economic stability, and promoting sustainable development. Rebuilding policy credibility, promoting competitiveness-boosting reforms, reforming state-owned companies, and enhancing climate resilience are among the top objectives, according to the UN study.
It is anticipated that South Asia’s economy would continue to grow in the near future. Regional GDP is expected to grow by 5.9 percent in 2024, 5.7 percent in 2025, and 6.0 percent in 2026, driven by robust economic growth in India and recovery in other economies, such as Bhutan, Nepal, Pakistan, and Sri Lanka.
According to the UN, Pakistan is addressing structural issues with the aid of the IMF program.
Risks to the prognosis, however, are skewed downward due to the potential escalation of geopolitical tensions, the slowdown in external demand, persistent debt issues, and social unrest. Extreme weather occurrences are also a major risk because the area is extremely susceptible to the effects of climate risks.
It is anticipated that the region’s average consumer price inflation will decrease from 9.9 percent in 2024 to 8.3 percent in 2025 and 7.2 percent in 2026. With the exception of Bangladesh, all South Asian nations have had a sharp drop in inflation in 2024. With rates ranging from 3.1 percent in Sri Lanka to 28.4 percent in Iran, inflation forecasts for 2025 indicate a general decreasing trend.
Most central banks have been able to stop monetary tightening or keep lowering policy rates in 2024 as a result of the region’s declining inflationary pressures. To aid in the revival of the economy, the central banks of Sri Lanka and Pakistan have lowered their key policy rates.
South Asia has been hit hard by climate-related shocks in 2024. In the first half of the year, heat waves, droughts, and erratic rainfall caused lower agricultural yields and higher food prices in a number of the region’s countries, including Bangladesh, India, Pakistan, and Sri Lanka. Furthermore, impoverished rural households have been disproportionately impacted by extreme weather occurrences, which has resulted in income decreases and increased income disparity.
Since the epidemic, interest payments have increased dramatically, especially in nations like Sri Lanka, Pakistan, and the Maldives that already have heavy interest burdens.
