Despite a record high interest rate, Pakistan’s economy grew by 1% in the fiscal second quarter, according to data from the Pakistan Bureau of Statistics. This growth was lower than the median estimate of 1.8% in a Bloomberg survey. However, the National Account Committee revised upward economic growth for the previous quarter to 2.5% from 2.13%.
While agriculture saw growth of 5.02% from a year ago, industry contracted by 0.84%. The services sector grew by a minimal 0.01%. Despite efforts to avoid a sovereign default last year, Pakistan’s economy has remained fragile and relies heavily on IMF aid. Prime Minister Shehbaz Sharif is seeking a new loan from the International Monetary Fund to support the economy and bolster Pakistan’s foreign exchange reserves.
The IMF has lowered its GDP forecast for the current fiscal year to 2% from 2.5%, citing weaker domestic demand as the reason for this reduction in growth projections. However, the State Bank of Pakistan remains optimistic and is citing better farming and industrial output as supporting factors for economic stability in Pakistan.
Last fiscal year, Pakistan experienced a rare contraction of 0.17%. Despite these challenges, it continues to be one of Asia’s most populous countries with significant potential for future economic growth if it can overcome its current difficulties.
Overall, while there are challenges facing Pakistan’s economy, with continued support from international organizations like the IMF and strategic decision making by government leaders like Prime Minister Shehbaz Sharif, there is hope that this fragile economy can turn around and experience sustained growth in the future.