IMF slashes Pak’s growth to 0.5% for FY23 | Key worrisome economic indicators

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Pakistan has been struggling with an economic downfall for the last few months with multiple indicators clearly suggesting that the country is battling its worst nightmare since 1971 when the country lost a war against India and partitioned from Bangladesh.

The prices of essential items are surging like wheat flour costs ₹134 per kg, milk ₹160 per litre, mutton ₹1,300 per kg, rice ₹350 per kg, gram pulses ₹260 per kg, etc., in the cash-strapped country.

Amid high inflation and a growing unemployment rate in the cash-strapped country, the International Monetary Fund (IMF) has also lowered its forecast for Pakistan’s economic growth rate from 2 percent to just 0.5 percent for the current fiscal year.Let’s know Pakistan’s economic situation with these economic indicators,

1) Pakistan Rupee vs Dollar: Pakistan Rupee on Tuesday plunged to a historic low of ₹288.43 against the US dollar amidst volatile economic conditions. It experienced a sharp decline of ₹1.34 in the interbank foreign exchange market. Previously, the country’s currency hit a record low of PKR 287.85 against the dollar on April 5, 2023, according to a report published by pkrevenue.

2) Forex slips to $9.76 billion: The State Bank of Pakistan last week announced that the country’s foreign reserves fell by $55 million to $9.76 billion by the week ending on March 31, 2023, pkrevenue reported. The official reserves of SBP fell by $36 million to $4.208 billion during the week ending on March 31, 2023, as compared to the previous week. However, the current forex reserves can still provide more than one month’s worth of import cover.

3) Pakistan inflation: In March 2023, consumer price inflation in Pakistan jumped to a record 35.37% as compared to a year earlier. The country has experienced an unprecedented increase in petroleum prices over the past year. The weekly inflation data stated that diesel and petrol prices have risen by 103% and 81% respectively. The year-on-year increase in prices for the week ending April 06, 2023, are—cigarettes (165.88%), wheat flour (131.72%), gas charges for Q1 (108.38%), eggs (98.34%), etc.

4) IMF predicts Pak’s growth rate at 0.5% for FY23: The IMF has lowered its forecast for Pakistan’s economic growth rate from 2 percent to just 0.5 percent for the current fiscal year, amid high inflation and a growing unemployment rate in the crisis-hit country. The revision in Pakistan’s growth prospects is in line with similar 0.4 percent and 0.6 percent projected last week by the World Bank and the Asian Development Bank, respectively.

5) Loan delay: Pakistan is in panic after the IMF team that came to negotiate the details left without reaching a final agreement last month. Even though Finance Minister Ishaq Dar and Prime Minister Shehbaz Sharif agreed to all the preconditions including petroleum price hikes, raised taxes, etc. The IMF, Saudi Arabia, and the United Arab Emirates have been calling for structural reforms in the economy when the people are suffering from the delay in the release of the IMF’s tranche.

6) Increasing unemployment: Common Pakistanis are the worst hit by the worsening economic condition of the Pakistani economy. Teetering on the edge of bankruptcy, the situation In Pakistan is so bad that other than basic blue collared jobs there’s nothing left for the country’s educated youth. According to a recent report, the unemployment rate in Pakistan grows in proportion to the level of education. In other words, the more educated a Pakistani is, the greater the likelihood of him remaining unemployed.

7) Pakistan’s external debts: The Shehbaz Sharif-led government in Pakistan will have to return $77.5 billion as external debt in the next three years, that is by 2026. The numbers were mentioned in an analysis by the United States Institute of Peace (USIP). The report also noted that a major portion of the $77.5 billion is owed to China, and has to be paid in June when a $1 billion Chinese SAFE deposit and a roughly $1.4 billion Chinese commercial loan would mature.