Pakistan's govt trims its growth projection amid trade headwinds

By Kamran Haider

  Pakistan’s government lowered its economic growth projection for the fiscal year as global trade disruptions and tighter spending conditions by the International Monetary Fund weighed on the South Asian nation’s economy.  

Gross domestic product is estimated to expand 2.68 per cent in the fiscal year through June, Pakistan Bureau of Statistics said Tuesday. This compares with the government’s projection of 3.6 per cent for the current year and last year’s 2.5 per cent expansion.  

The government’s advance GDP estimate will be used to assess spending priorities in its upcoming budget. Prime Minister Shehbaz Sharif’s government is expected to present the budget for the next fiscal year on June 2. 

Pakistan’s economy faces headwinds from US President Donald Trump’s sweeping reciprocal tariffs. A 29 per cent levy on goods will hurt exports for sectors ranging from textiles to agriculture, that account for a large share of the country’s overseas shipments. 

Multilateral institutions like IMF and Asian Development Bank have downgraded growth estimates for the current year citing weak economic activity and global uncertainty. Economists said it might be an uphill task for Pakistan to reach even the revised estimate for the year. 

The government forecast “is an optimistic projection,” said Ankur Shukla of Bloomberg Economics. Its unlikely to grow as fast as needed in the final quarter to achieve the annual forecast, said Shukla.  

For the January-March period, the economy grew at 2.4 per cent, higher than the 2 per cent expansion predicted by economists in a Bloomberg survey.  

Funding from multilateral agencies have helped the nation avert a default in 2023. Earlier this month, the IMF disbursed roughly $1 billion from a broader $7 billion program agreed last year but tightened the loan conditions for further aid.