Low growth predicted
After the World Bank’s prediction of a one percent contraction of GDP in 2020-2021, the IMF’s prediction, in its Economic Monitor, of one percent growth, is probably welcome. It is certainly closer to the government’s own target of 2.3 percent, but it is even more anemic than it. Accompanying that low growth it has also predicted relatively higher inflation, at 10.2 percent, while it has also predicted that unemployment would reach 5.1 percent. That indicates that the IMF thinks Pakistan is experiencing stagflation.
This cannot be ascribed to the covid-19-caused depression. Such a worldwide contraction should also be accompanied by a tumbling of prices. That has been the case with petroleum prices, but before the pandemic struck, the IMF itself had forced a massive devaluation of the currency, with the result that imports became much more expensive. As palm oil is directly imported, and as fuel is such an important input in agricultural production and marketing, food is bound to grow more expensive. The situation confronting the government is a dire one. Getting Pakistan onto an IMF programme is no solution. That the PML(N) government left office after posting a healthier growth rate begs the question of what exactly the PTI intended to achieve by its opposition. It exploited popular dissatisfaction with the government’s handling of the economy. However, with food prices rising and jobs being lost steadily, the government might face the conversion of the dissatisfaction it exploited into rage it cannot control. The Pakistan Democratic Movement hopes to convert that public dissatisfaction into protests.