Karachi: The US-based global research house, Fitch Solutions, has revised down the economic growth forecast of Pakistan, believing in tightening of the monetary and the fiscal policies under the IMF (International Monetary Fund) bailing out the negative impact on GDP growth.
At Fitch Solutions, the forecast for Pakistan’s real Gross Domestic Product (GDP) has been revised for the Fiscal Year 2019-19 (June to July) and Fiscal Year 2019-20 to drop down to 2.7% from 3.2% and 4.0% from 4.4%. The report was published by the global research house on ‘Economic Analysis – IMF deal to weigh on Pakistan’s growth in the short run’.
As per the report, the bailout package from IMF will give tighter monetary and the fiscal policies in the country that will be providing a negative impact on the economic growth in the near terms. But with CPEC (China=-Pakistan Economic Corridor), the investment in it can provide some sort of support to the economic conditions of Pakistan.
After long term negotiations for eight months, Pakistan has reached an agreement with IMF for a USD 6 billion bailout package to overcome the payment crisis of the country. As per the agreement, SBP (State Bank of Pakistan) will be increasing the policy rate by 150%.
The Budget 2019-20 aims of trimming Pakistan’s deficit to 0.6% from 1.9% of GDP and due to these tight fiscal and monetary policies, in between the subdued economic growth outlook, the Fitch Solution has revised down the forecast of Pakistan’s real GDP growth analysis.
As per the analysis made by Fitch Solutions, the growth of GDP is expected to decline to 5.3% in 2019-20 from 6.3% in 2017-18. Inflation is going to rise in Pakistan to worst scenarios with an increase to 9.1% as compared to 4.2% in the previous year.
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