Pakistan's economy will be hit by global challenges by 2024, says UN report – Newspaper

United Nations: The UN World Economic Status and Prospects 2024 report outlines a nuanced economic outlook for Pakistan, with modest GDP growth of two percent in 2024 and a slightly improved 2.4 percent in 2025.

However, this trend is masked by indicators. Last year's strong post-Covid global economic recovery, which contributed to GDP growth around the world, masked hidden risks and structural vulnerabilities in the global economy.

Major economies in South Asia, including India, Pakistan and Bangladesh, classify themselves as lower-middle-income countries, the report said. Despite regional economic diversification, challenges persist, particularly in food security.

In 2023, Bangladesh and Pakistan experienced an increase in the number of people facing severe food insecurity, in contrast to Sri Lanka, where the situation improved. Afghanistan is the worst affected, with 46 percent of its population facing severe food insecurity.

Digging deep into Pakistan's economic landscape, the report reveals alarming statistics. The inflation rate rose to 39.18% in 2023, prompting the State Bank of Pakistan to maintain a record-high policy rate of 22pc from June 2023.

Additionally, Pakistan sees its currency appreciate by more than 20% by 2023.

Also, Pakistan is struggling with substantial sovereign debt and an unsustainable debt-servicing burden. External debt is projected to be 36.5% of the country's nominal GDP in 2023, a significant increase from the previous year. The government debt-to-GDP ratio reached 89 percent in 2022, underscoring the challenges of managing fiscal responsibilities.

Real effective exchange rates, a broad measure, fell from 88.0pc in 2022 to 72pc in 2023. The index is calculated as an average of bilateral exchange rates adjusted by relative consumer prices, reflecting Pakistan's economic challenges.

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In conclusion, the Global Economic Status and Prospects to 2024 report paints a complex picture for Pakistan, with moderate economic growth projections alongside a raft of challenges including inflationary pressures, currency depreciation and high levels of sovereign debt.

Posted on January 6, 2024 at dawn

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