The IMF has delivered sobering news to Pakistan, trimming its GDP growth forecast to 3% from 3.2%. For a nation grappling with population pressures, this revision signals deeper structural woes, as per reports from local media outlets.
Large-scale manufacturing witnessed a 1.25% real decline over the initial five months of the fiscal year, while export growth stalled. Remittances from the diaspora hit an all-time high of $8.8 billion in FY2025’s first quarter, serving as the economy’s primary growth engine alongside foreign loans and aid.
Such heavy dependence on unpredictable inflows spells trouble for sustained prosperity, the report cautions. IMF-mandated austerity—through elevated taxes, subsidy cuts, and tight fiscal policies—complicates efforts to attract investors and streamline bloated public sector companies.
Despite improvements in the current account balance, rupee steadiness, falling inflation, and policy rate reductions halfway through the fiscal year, growth remains disappointingly subdued. These advancements largely stem from external boosts, notably the UAE’s decision to extend $2 billion in central bank deposits for another year, rather than robust homegrown strategies.
Economists emphasize that without injecting vitality through higher investments and competitive sectors, this fragile equilibrium won’t endure. Pakistan stands at a crossroads, needing comprehensive reforms to transform dependency into dynamic, inclusive growth.