Islamabad (TDI): Almost a month before scheduled talks on its $7 billion Extended Fund Facility (EFF) with Pakistan, the International Monetary Fund (IMF) on Friday lowered the country’s growth estimate to 3 percent for current fiscal year, down from 3.2 percent it had projected about three months ago.
In its World Economic Outlook Update released on Friday, the IMF kept the economic growth forecast for next financial year (FY2026) unchanged at 4 percent but lowered by 0.2 percentage points for current year.
The international lending agency did not specifically explain factors leading to its downward revision in GDP growth rate while keeping the global growth rate unchanged at 3.3 percent for both current and next years.
Lower than estimated cotton production and struggling industrial output appeared to be main reason that is also creating considerable revenue shortfalls.
Though the IMF kept the global growth outlook broadly unchanged from October, it said divergences across nations were widening.
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Among advanced economies, the United States is stronger than previously projected on continued strength in domestic demand, thus raising growth projection for the US this year by 0.5 percentage point to 2.7 percent.
Latest World Economic Outlook keeps economic growth forecast for the upcoming fiscal year unchanged at 4 percent.
Growth in the euro area, by contrast, is expected to increase only modestly, to 1 percent from 0.8 percent in 2024, mainly because of geopolitical tensions.
Headwinds include weak momentum, particularly in manufacturing, low consumer confidence, and the persistence of a negative energy price shock.
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European gas prices remain about 5 times as high as in the United States, versus twice as high before the pandemic.
