According to the International Monetary Fund, Pakistan’s GDP growth will slow from 5.6 percent in 2021 to 4 percent in 2022. (IMF).
Pakistan’s GDP growth is expected to be 4.2 percent in 2023, according to the Fund’s newest study, “Regional Economic Outlook Middle East and Central Asia, Divergent Recovery in Turbulent Times.”
Consumer price inflation is expected to reach 11.2 percent in 2022, up from 8.9 percent in 2021, according to the Fund. Inflation is expected to be 8.5 percent in 2022 and 10 percent in 2023, compared to 6.6 percent in 2021. Internal supply-chain restrictions (Armenia, Kyrgyz Republic) and increased domestic demand (certain CCA members, Pakistan) have exacerbated inflationary pressures in a few countries, according to the Fund.
Pakistan’s broad money growth is expected to be 14.9 percent in 2022 and 13.4 percent in 2023, compared to 16.2 percent in 2021, according to the fund.
In 2022 and 2023, the central government’s net lending/borrowing is expected to be -6.3 percent of GDP, down from -6.6 percent in 2021.
In comparison to -6.1 percent in 2021, the general government fiscal balance is expected to be -5.8% in 2022 and -4.2 percent in 2023. The entire revenue of the general government, excluding grants, is expected to be 12.5 percent of GDP in 2022 and 12.9 percent in 2023, up from 12.4 percent in 2021.
Pakistan’s total government gross debt is expected to reach 71.3 percent of GDP in 2020 and 66.8% in 2023, down from 74 percent in 2021. In 2022 and 2023, total government net debt is expected to be 65.4 percent and 61.7 percent, respectively, compared to 66.4 percent in 2021. Pakistan’s public debt fell by 6% of GDP in 2021, according to the report.
According to the analysis, debt in Egypt, Georgia, and Morocco is expected to rise somewhat, while debt in Armenia and Tunisia is expected to rise significantly (about 4 percentage points) by 2021, highlighting the impact of devaluation on foreign currency debt. In 2022, debt in EM&MI countries will be 13 percentage points over pre-pandemic levels on average, with the exception of Pakistan, where debt will be 6 percentage points below pre-pandemic levels.
Pakistan’s products and services exports are expected to reach $37.8 billion in 2022 and $40.8 billion in 2023, up from $31.5 billion in 2021. Goods and service imports are expected to reach $85 billion in 2022 and $86.5 billion in 2023, up from $61.7 billion in 2021.
Pakistan’s current account balance is expected to be -5.3 percent in 2022 and -4.1 percent in 2023, according to the IMF, up from -0.6 percent in 2021.
Pakistan’s gross official reserves are expected to fall from $17.3 billion in 2021 to $15.9 billion in 2022 and $13.6 billion in 2023, according to the IMF.
Pakistan’s total external debt is expected to reach $34.2 billion in 2022 and $32.7 billion in 2023, down from $34.7 billion in 2021. In 2022, Pakistan’s gross official reserves are expected to be 2.2 months of imports, down from 2.4 months in 2021. In 2023, they are expected to be 1.9 months of imports.
By December 2021, capital adequacy ratios are expected to be 16.7% of risk-weighted assets, compared to 17.9% of risk-weighted assets in September 2021. By December 2021, the return on assets is expected to be 1.6 percent before taxes, the same as it was in September 2021.
By December 2021, nonperforming loans are expected to account for 7.9% of total gross loans (on a 90-day basis), down from 8.3% in September 2021.
Pakistan has also boosted policy rates since September 2021, according to the study, although its monetary policy stance has remained supportive.