The International Monetary Fund has projected Pakistan’s economy to grow at 2.5% in 2024, although the rate could rise to 5% by 2028.

In its World Economic Outlook report published on Tuesday, the IMF said that inflation in Pakistan will fall from 29.2% in 2023 to 23.6% in 2024.

The report also projected the unemployment rate in Pakistan to fall from 8.5% to 8% in the upcoming year. However, the current account deficit will rise from 0.7% to 1.8% in 2024.

Meanwhile, the IMF painted a bleak picture of the global economy but said that it was slowly recovering.

Global economic outlook

The global lending institution projected global economic growth to come in at 3% this year, the same as its last forecast in July.

For the coming year, the Washington-based lender revised its estimate slightly downwards, from 3% to 2.9%.

The IMF described the global economy as “still limping along,” despite challenges ranging from high inflation and tight monetary policy, to Russia’s war on Ukraine and extreme weather events.

The slowdown is more pronounced in the industrialised world than in developing countries, the IMF said as it issued its latest World Economic Outlook.

In 2022, as Covid-19’s health and economic consequences began to wane, the global economy grew by 3.5%.

Inflation, which is still elevated in many countries - although below the historic highs of earlier this year - remains a major factor affecting growth.

“Despite signs of resilience earlier in 2023, the impact of policy tightening to reduce inflation is expected to cool economic activity going forward,” the IMF said.

The world’s top two economies will see varying fortunes in the coming year, the IMF predicted.

The US is growing more strongly than expected, with growth this year revised upwards by 0.3 percentage points to 2.1%. Next year, GDP is expected to grow by 1.5%, again more than expected, thanks partly to robust consumption and investment.

China on the other hand saw its growth forecast revised downwards. This year, the Chinese economy is expected to grow by 5%, 0.2 percentage points lower than the earlier forecast. Next year growth is projected to be 4.2%, - 0.3 percentage points lower.

The crisis in China’s real estate sector was not only a domestic financial problem, but also poses a risk to the global economy, the IMF said. China’s credit-driven real estate growth model had to change, the IMF argued.

Russia’s invasion of Ukraine posed an ongoing risk to the global economy, according to the IMF. It had “caused major commodity markets to fragment, and geopolitical tensions could make matters worse,” it warned.

The IMF on Tuesday left its top-line global growth forecast for 2023 unchanged, despite significant underlying differences between regions, while lifting its inflation outlook for the next couple of years.

The updated World Economic Outlook (WEO) report, released as the International Monetary Fund holds its annual meetings in Marrakesh, maintains a global growth estimate of 3% for this year while cutting the 2024 assessment to 2.9%, down 0.1% from the previous forecast in July.