Pakistan’s fragile economic recovery may face renewed strain as slower growth and rising inflation threaten stability amid escalating global uncertainty linked to the Middle East conflict, the International Monetary Fund cautioned in its latest assessment, sources told ProPakistani.
According to the IMF’s newly released World Economic Outlook, global economic expansion is expected to ease to 3.4 percent, reflecting the growing impact of geopolitical tensions, disrupted energy supplies, and market volatility caused by ongoing regional hostilities. The institution warned that the scale and duration of the conflict will ultimately determine how severe the economic fallout becomes worldwide.
For Pakistan, economic growth is projected to reach 3.6 percent during the current fiscal year, missing the government’s 4.2 percent target and signaling that the country’s recovery remains uneven. While stabilization efforts have improved macroeconomic indicators compared to previous crises, external shocks and persistent structural challenges continue to restrain stronger expansion.
Inflation pressures are also expected to return after a temporary slowdown last year. The IMF forecasts average inflation at 7.2 percent this fiscal year, with prices likely to climb further to 8.4 percent in the following year. The outlook suggests that easing price trends seen earlier may prove short-lived, raising concerns over renewed pressure on household incomes and business activity.
Despite economic headwinds, unemployment is projected to decline modestly, falling to 6.9 percent this year and potentially easing further to 6.5 percent next year. Analysts, however, note that slower economic growth may limit the pace of job creation and broader income recovery.
The IMF also expects Pakistan’s current account deficit to remain relatively contained at around 0.4 percent of GDP this year before widening to 0.9 percent next year as global energy market instability increases import costs. The report emphasized that disruptions in energy supply chains and financial markets caused by Middle East tensions are reshaping economic priorities across the world, leaving emerging economies particularly exposed to prolonged uncertainty.
