Wali Zahid

Futurist · Disruptor · Visionary

In two years, Pakistan economy nosedives

Wali Zahid
June 8, 2020

May 2020: A GDP chart that explains what happened to Pakistan

Pakistan GDP to fall to -2.6% in 2020 and to -0.2% in 2021: World Bank

June 2020: In its revised June 2020 Global Economic Prospects report, the World Bank has forecasted Pakistan GDP to fall to -2.6% in 2020 and to -0.2% in 2021. Above photo

19 May 2020: For the first time in 68 years, Pakistan’s economy has marginally contracted by 0.38% in the outgoing fiscal year. The National Accounts Committee also approved the provisional GDP growth rate for the first year of the PTI government from 3.3% to 1.9% for fiscal 2018-19, which is the lowest in 11 years. See chart, above

The economic contraction coupled with currency devaluation has caused the size of the economy – in the US dollar terms – to slip to around $265.6 billion from $280 billion a year ago. At the end of the PML-N government’s term, the size of the GDP in dollar terms was $313 billion. – Tribune

In its revised WEO, IMF has forecasted Pakistan GDP growth to be Negative 1.5. Source: Statista

Pakistan GDP to slip to 2.1% in 2020-21: UN

18 January 2020: In its World Economic Situation and Prospects (WESP) 2020 report, the UN forecasts Pakistan’s GDP growth to slip to 2.1% this year (fiscal 2020-21). Indian economy is expected to rise to 6.6% and Bangladesh to grow by 7.8%, says WESP.

26 September: ADB sees Pakistan GDP growth falling to 2.8% in FY2020. ADB Outlook 2019

18 August 2019: What can happen in a year: From one of the fastest-growing economies (2018 GDP 5.8%) to nearly slowest in South Asia in 2019, this is Pakistan. Forecast by ADB

7 April 2019: Pakistan’s GDP growth is projected to slow down to 3.4% in fiscal year 2018-19, from 5.8% a year before, and to 2.7% in FY2019-20, reflecting a broad-based weakening in domestic demand as monetary and fiscal policies have been tightened to contain macroeconomic imbalances, the World Bank said in a report.

In its latest edition of the South Asia Economic Focus, Exports Wanted, the World Bank cited macroeconomic imbalances, reflected in large fiscal and current account deficits, as the reason behind the projected slowdown in Pakistan’s GDP growth. – News

10 October 2018: The International Monetary Fund (IMF) sees Pakistan GDP growth to fall at 4% during the current fiscal year as it says the economy is losing grip on the gains made during the previous years.

“Growth in Pakistan is expected to strengthen from 5.4% in 2017 to 5.8% in 2018… underpinned by improved energy supply, investment related to CPEC, and strong credit growth,” the IMF said in the ‘World Economic Outlook (WEO) October 2018: Challenges to steady growth’ report.

“However, macroeconomic stability gains have been eroding, putting the outlook at risk. Growth is expected to moderate to 4.% in 2019, and slow to about 3% in the medium term – till 2023.” – The News

It was only this week that we had reported Pakistan’s long-term positive outlook (link above), provided by HSBC in its 2030 report. The forecast provided by IMF today will impact our 2030/2050 forecasts by HSBC, PwC, and Goldman Sachs negatively.

Newly updated IMF GDP growth forecast for Pakistan:

2018: 5.8%

2019: 4%

2023: 3%

In April 2018 WEO, before the current PTI government took office, the projections we reported were:

2018: 5.3%

2019: 5.6%

2020: 4.7%

Earlier this week, the World Bank revised down growth forecast for Pakistan to 4.8% for the current fiscal year as it says the macroeconomic stabilisation is to take toll on the economy.

Wali Zahid

Wali Zahid is a longtime China watcher and a Pakistan futurist. An award-winning journalist, he writes on issues of significance to Pakistan and CPEC & BRI.