IMF forecast

In its World Economic Outlook 2020, the IMF predicted Pakistan’s growth rate at one percent, average inflation rate at 8.8 percent, current account deficit at 2.5 percent of GDP and unemployment rising by 0.6 percent to 5.1 percent during the present fiscal year. This is in large contrast with targets of 2.1 percent GDP growth rate, 6.5 percent inflation and 1.5 percent current account deficit established by the government. The rate of inflation would be culminating at 10.2 percent at the end of fiscal year 2021. The IMF estimated current account deficit rising from 1.1 percent of GDP in fiscal year 2020 to 2.5 percent in fiscal year 2021 and then going up to 2.7 percent in fiscal year 2025.
The World Economic Outlook projected global growth at -4.4pc in 2020 – 0.8 percentage point above the June 2020 forecast. It stated that the stronger projection for 2020 compared with the June 2020 estimates depicted the net effect of two competing reasons: the upward stimulus from better-than-anticipated second quarter GDP outturns largely in advanced economies versus the downward from continuous social distancing and avoid re-openings in the second half of the year. Projects average inflation rate at 8.8pc and current account deficit at 2.5pc of GDP this year. The World Economic Outlook noted that recovery had taken source in the third quarter of 2020 and was advanced gradually over 2021. The recovery is likely to be by continuous social distancing until health risks are addressed and countries may have to again enforce mitigation measures depending on the spread of the virus. The IMF projected the global growth at 5.2 percent in 2021 – 0.2 percentage point lower than the growth projected in June 2020. The predicted 2021 recover following the increase 2020 downturn voices a small anticipated increase in global GDP over 2020-21 of 0.6 percentage point comparison to 2019.
The World Economic Outlook observed that remittance flows contracted largely during the early lockdown period but had shown signs of recovery. The risk of a decline in payments and transfers from migrant workers back to their home countries is very important specifically for such countries as Bangladesh, Egypt, Guatemala, Pakistan, the Philippines, and those in sub-Saharan Africa. More commonly, the IMF stated the global economy was carrying out from the height to which it had declined during the large lockdown in April. The Covid-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating limited lockdowns to protect exposed populations. Recovery in China has been quicker than anticipated, the global economy’s long ascent back to pre-pandemic levels of activity remains adjusted to hurdles. The World Economic Outlook stated that above one million lives had been lost to Covid-19 since the commencement of the year and the death continued to rise. Many more have suffered serious sickness. Near to 90 million people are assumed to decline into mostly withdrawal this year. The prevention of further hurdles will require that policy support is not prematurely withdrawn. The way ahead will require proficient domestic policies that administer trade-offs between lifting near-term activity and solving medium-term problems. It stated that maintaining the amelioration recovery will also require strong international collaboration on health and financial support for countries countering liquidity decline. The IMF considered the governments, where possible, to continue to support workable still vulnerable firms with moratoria on debt service and equity-like support to maintain jobs. Over time, once the recovery has taken a strong hold, policies should shift slowly to providing reallocation of workers from sectors likely to lessen on a long-term basis (travel) to augmenting sectors (e-commerce).
Along the change workers will need to be supported, including through income transfers, retraining and re-skilling programmes. The limited countries will need to generate room for immediate spending needs by focusing crisis countermeasures and downward targeted subsidies. Some will require extra help from creditors and donors through debt restructuring, grants and favorable financing, building on significant initiatives under way. The IMF advised its member countries to formulate near-term support policies with a view toward placing economies on paths of stronger, justifiable and maintainable growth. Also, investments in health and education (including reducing losses incurred during the pandemic) can help achieve cooperative and overall growth.
According to new Asian Development Bank Pakistan’s economy has untouched the large influence of the coronavirus outbreak and the locust invasion. The two disasters have hurt millions of Pakistanis and devastated the economy. A new ADB report about the Covid-19 pandemic and the locust swarms on farm households in Sindh shows that livelihoods and food security were substantially affected by the virus outbreak. 50 percent of over 400 farmers interviewed for the survey reported lower food consumption and a third complained of reductions in their earnings owing to the nationwide lockdown enforced to control the spread of infection. Likewise the locusts have affected almost all respondents from upper Sindh and over a third from lower Sindh. The bank had carried the survey back in June when infections were spreading, and developing locust invasions were menacing to devastate the crops and orchards in most parts of the country. Although the two curses have left deep injury on the economy and the people, a significant number of households in the urban and rural areas appear to be on the road to revival. The virus break and the locust attack have clearly shown us that we are ready to fight such emergencies. The government took some prompt policy and other measures to lessen the effects of Covid-19 and the locusts. But due to dearth of the required infrastructure it was difficult to handle. We do not have implements to protect our farmers from another locust invasion. Nor do we have services to treat Covid-19 infections outside a few major cities. The government requires taking action to both lessen the harm already caused and to invest in long-term means to face such emergencies.

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