Another international agency has issued an economic growth forecast that is significantly below the government’s prediction. The IMF estimates 4% growth in the current year, matching the prediction of the ADB and much higher than the World Bank’s 3.4% prediction. All are, however, far below the government’s own 4.8% projection. Other recent forecasts from independent analysts have also been well below the government’s estimates.
The IMF’s recent update in the October edition of its World Economic Outlook (WEO) also has worryingly high projections for inflation and unemployment, while the current account deficit is also expected to shoot up. But Pakistan is hardly the only country with a sub-par outlook. The WEO does not have good news for the rest of the world either, scaling back its global growth estimate by 0.1%, as supply disruptions in the developed world and “worsening pandemic dynamics” in the developing world continue to take their toll. Global employment and job creation levels are also expected to lag. The lower growth expectation also comes despite robust short-term prospects for some commodity export-oriented developing countries.
On the flip side, the report notes that several developing countries have significantly dark growth projections that are being masked by the headline number. Projections for several countries that had bright outlooks as recently as the weeks before the pandemic are now flat. Also unfortunate is the WEO’s prediction that problems caused by the pandemic will not be overcome anytime soon. The report says that “fault lines opened up by Covid-19 are looking more persistent — near-term divergences are expected to leave lasting imprints on medium-term performance.” There is also concern that new Covid-19 variants could further derail growth if widespread vaccination is not achieved.
Unfortunately, much like the haphazard global effort to deliver vaccines to poorer countries, the IMF’s other solutions may also hit hurdles as several countries focus on tribalism rather than the greater good. Calls to reverse trade restrictions are unlikely to succeed, and a global minimum corporate tax won’t find support from tax havens that are even more reliant on the tax avoiders of the world to keep them afloat.
Published in The Express Tribune, October 14th, 2021.