Pakistan’s economy is expected to experience moderate growth in 2024 and 2025, according to a recent United Nations economic survey. The UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP) report forecasts a real GDP growth of 2% and 2.3% respectively for these years.
This positive outlook comes after a challenging 2023 marked by significant floods impacting agricultural production and political unrest dampening business confidence. However, the report acknowledges the progress made in regaining macroeconomic stability through an agreement with the International Monetary Fund (IMF) and additional support from key allies.
Inflation Expected to Ease
The UN survey also predicts a significant decline in inflation, with an anticipated drop from 26% in 2024 to 12.2% in 2025. This decrease is a welcome sign for Pakistanis struggling with rising costs.
Fiscal Consolidation Efforts Highlighted
The report highlights the government’s efforts to achieve fiscal stability through measures like reducing electricity subsidies. However, it also identifies the need for improved tax administration and policy reforms to address the tax gap and bolster development financing.
UN Calls for Long-Term Development Solutions
The UN Secretary-General, Antonio Guterres, emphasizes the need for long-term, affordable funding solutions for developing countries in Asia and the Pacific. He urges a shift away from the “antiquated, unfair, and broken global financial system” that burdens these nations with high-interest debt and limits their ability to invest in social programs and infrastructure.
Sustainable Development Requires Balanced Approach
While advocating for a robust tax system and efficient public spending, the report acknowledges the need for responsible borrowing to meet development goals. The survey also suggests exploring ways to unlock domestic savings and strengthen capital markets to increase long-term investment opportunities.
Regional Growth Outlook
Despite Pakistan’s economy projected growth, the UN report cautions that the wider Asia-Pacific region faces challenges like trade disruptions, geopolitical tensions, and volatile inflation and interest rates. The report predicts a regional GDP growth of 4.4% in 2024 and 2025, which is below pre-pandemic trends but still indicates a relatively stable trajectory.
