ISLAMABAD: A marked decrease in current account deficit and some semblance of fiscal discipline achieved in 2023 bode well for Pakistan’s economic outlook for 2024.
According to Dr. Anil Salman, Chair of Economic Security, Islamabad Policy Research Institute, said: “When we look at 2023, we have a rather grim picture as GDP growth remained subdued and inflation, especially food, increased, though there was marked reduction in current account deficit.”
He added that the establishment of the civil-military Special Investment Facilitation Cell (SIFC) to attract investments was a big positive for Pakistan. “During a period of declining foreign exchange reserves, Pakistan successfully engaged with the International Monetary Fund to secure a short-term financial facility, contributing positively to our economic stability,” he added.
“One notable source of optimism and positivity in 2023 was the commendable performance of the Pakistan Stock Exchange (PSX), which reached the historic milestone of 68,000 points for the first time. This achievement is regarded as a confidence booster for potential investors,” Salman noted.
“People are confident because the election date has been announced,” he said, adding that the post-election government was likely to go to the IMF to secure a long-term loan facility. “And if the loan programme is approved, it will help ease several economic problems for Pakistan.”
He anticipated an easing in inflation, improvement in the current account and strengthening the rupee in 2024.
He noted that the agricultural sector over the past decade witnessed a notable downward trajectory in growth due to a lack of significant advancements. “However, as the government is making investments in modern farm techniques, the agriculture sector will provide some fruitful outcomes in 2024.”
“The government is taking measures to attract investment, boost exports and alleviate stress on balance of payments,” he said, pointing out that Pakistan’s investment-to-GDP ratio should markedly go up from the current 13%. “Though the savings rate is not very high at the moment, it is expected to increase if the rupee maintains its stability.”
“I don’t think 2024 will be as challenging as 2023,” he opined.
According to the monthly Economic Outlook for December 2023 released by the Finance Ministry’s Economic Adviser Wing, inflation is expected to settle at a “moderate level” despite remaining in higher double digits. The report also highlights a positive trend in the twin deficit, indicating improved economic management and a move towards reducing macroeconomic imbalances, thereby establishing a foundation for higher and sustainable economic growth. Inflation might decrease to 25% in January from 27.5% to 28.5% in December. –INP
