The International Monetary Fund (IMF) on Tuesday lowered Pakistan’s growth forecast to just 2.6% for the current fiscal year, while also revising global economic projections amid uncertainty stemming from US President Donald Trump’s trade tariff measures.
In its April 2025 World Economic Outlook report, the IMF reduced Pakistan’s growth estimate from 3% to 2.6%, becoming the second major international financial institution to cut the country’s growth outlook for fiscal year 2024-25.
The revised forecast falls significantly short of the 3.6% growth target set by the Pakistani government for the fiscal year. For the next fiscal year, the IMF sees Pakistan’s economic growth reaching 3.6%.
However, it has improved Pakistan’s inflation outlook from nearly 10% to 5.1%, which is also expected to remain at 7.7% in the next fiscal year. In another positive development, the IMF improved Pakistan’s current account deficit projection from nearly 1% of the GDP to just 0.1%.
The IMF was earlier expecting Pakistan’s current account deficit widening to $3.7 billion, which is now projected to fall to around $400 million for this fiscal year. For the next fiscal year too, the current account deficit is projected at just 0.4% of the size of the economy.
The IMF will release the detailed background of its revised projections in the country’s staff level report, which will be published after the approval of the second loan tranche by the IMF board next month.
IMF Managing Director Kristalina Georgieva and Finance Minister Muhammad Aurangzeb met in Washington on Monday. Aurangzeb praised the IMF team for obtaining a Staff-Level Agreement on the First Review under the Extended Fund Facility (EFF) and a new arrangement under the Resilience and Sustainability Facility (RSF), according to a handout from the Finance Ministry.
According to the Finance Ministry, Aurangzeb reaffirmed the Pakistani government’s determination to keep the reform momentum going and invited Georgieva to come to the country on behalf of Prime Minister Shehbaz Sharif.
Additionally, the finance minister met with US Treasury Department Assistant Secretary Robert Kaproth and gave him an update on Pakistan’s improved macroeconomic metrics. He emphasized current changes in debt management, state-owned companies (SOEs), energy, taxation, privatization, and pensions.
