The International Monetary Fund has slashed the growth outlook for cash-strapped Pakistan, forecasting the South Asian country’s fragile economy will grow just 0.5 percent this year, down from 6 percent in 2022.
The latest data on Pakistan’s ailing economy was released by the IMF on Tuesday, when it unveiled its World Economic Outlook report in Washington, DC.The IMF also forecast 27 percent inflation for this year for the country of more than 230 million people.
The global lender warned that unemployment would continue to rise in Pakistan which is struggling to avoid a default as it recovers from the destruction caused by last summer’s floods, which killed 1,739 people and caused $30bn in damages.
The coalition government of Pakistan’s Prime Minister Shahbaz Sharif is in talks with the IMF to receive a key tranche of a $6bn bailout package signed in 2019 by Sharif’s predecessor Imran Khan.
In recent weeks, the government slashed subsidies and raised taxes to comply with the bailout terms and secure the release of the $1.2bn portion of the deal that has been stalled since December. But those measures resulted in increases in the price of food, gas and power.
Sharif’s government has become unpopular because of higher food costs, although he has blamed Khan, who is now the country’s opposition leader, for mismanaging the economy when he was in power.
Khan was deposed last April in a no-confidence vote in parliament, and since then he has been leading rallies in a failed attempt to force Sharif to agree to an early election, which is scheduled for later this year.