Pakistan Economic Forecast

Pakistan Economic Outlook

April 16, 2019

The economy remains in choppy waters. The budget deficit was elevated in July-December 2018 as fiscal consolidation efforts bore little fruit, while public debt was up markedly year-on-year in February. Moreover, manufacturing output shrank sharply in January, negatively impacted by the government’s stabilization measures, while the latest data suggests the agricultural sector is struggling. More positively, the external sector has strengthened somewhat: The trade deficit has narrowed notably in the first two months of this calendar year, remittances were up markedly in July-March, while international reserves have recently picked up slightly. That said, the current account shortfall is still gaping. On the political front, negotiations with the IMF over a crucial bailout package are ongoing, and the Fund will visit the country before end-April, potentially to wrap up a deal.

Pakistan Economic Growth

The economy is seen losing considerable steam in FY 2019 as a tighter fiscal stance, weak manufacturing and agricultural sectors, and tepid investor sentiment eat away at growth. Yawning twin deficits, low international reserves, high public debt and strained relations with India pose downside risks, while an IMF support package will be key to recouping confidence. Our panelists see growth of 4.2% in FY 2019, which is down 0.1 percentage points from last month’s estimate, and 4.0% in FY 2020.

Pakistan Economy Data

Population (million)183186190194197
GDP per capita (USD)1,2671,3141,4281,4661,547
GDP (USD bn)231245271284305
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)2.62.515.87.511.0
Industrial Production (annual variation in %)
Unemployment Rate6.  
Fiscal Balance (% of GDP)-8.2-5.5-5.3-4.6-5.8
Public Debt (% of GDP)62.662.761.865.565.0
Money (annual variation in %)16.912.612.814.513.9
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Policy Interest Rate (%)9.0011.006.505.755.75
Exchange Rate (vs USD)99.698.68111.9114.7114.9
Exchange Rate (vs USD, aop)96.82112.9111.4114.3114.8
Current Account (% of GDP)-1.1-1.3-1.0-1.7-4.0
Current Account Balance (USD bn)-2.5-3.1-2.8-4.9-12.1
Trade Balance (USD billion)-15.4-16.6-17.2-18.4-26.7
Exports (USD billion)24.825.
Imports (USD billion)11.241.741.311.448.7
Exports (annual variation in %)0.31.1-3.9-8.80.1
Imports (annual variation in %)-0.53.8-0.9-2.320.6
International Reserves (USD)8.511.816.020.918.7
External Debt (% of GDP)25.025.322.724.526.2

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Pakistan Facts

Bond Yield13.290.0 %Apr 12
Exchange Rate141.5-0.05 %Apr 12

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