The International Monetary Fund (IMF) reduced its growth forecast for Pakistan to 2.6 percent, citing the impact of US rates now at 100 years maximum and warning that the increase in commercial tensions would be more slowed to growth.
The IMF published an update of its global economic perspective compiled in just 10 days after the president of the United States, Donald Trump, announced universal tariffs on almost all commercial partners and higher rates, currently suspended, in many countries. Pakistan was beaten by a 29pc tariff on goods that exports to the United States, that economists, according to economists, could bring immediate obstacles but also long -term opportunities.
In January, the IMF had reduced the growth of the country to 3PC for the current fiscal year, below the 3.2PC that had previously projected.
In its last update, the IMF reduced growth estimation at 2.6pc for the current fiscal year and 3.6 for the next fiscal year. He also placed the estimate of inflation in 5.1pc and 7.7pc for current and fiscal years in the next.
The increase in commercial tariffs on Pakistani products could have a devastating impact on Pakistan’s important exports and serves as a call for diversification, according to a state group of experts.
“A storm can be brewing on the commercial horizon of Pakistan,” said the Pakistan Development Economics Institute (asks) last week, adding that “the reciprocal rates proposed by the United States could have a devastating impact on the country’s export sector.”
In a clear policy note, the Institute warned that these rates could lead to macroeconomic instability, significant loss of jobs and a critical reduction in currency gains.
Global projections
Meanwhile, it reduced its forecast for global growth in 0.5 percentage points at 2.8pc by 2025, and at 0.3 percentage points at 3pc from its January forecast that growth would reach 3.3pc in both years.
He said that inflation was expected to decrease more slowly than expected in January, given the impact of tariffs, reaching 4.3pc in 2025 and 3.6pc in 2026, with “remarkable” rise reviews for the United States and other advanced economies.
The IMF described the report as a “reference forecast” based on developments until April 4, citing the extreme complexity and fluidity of the current moment.
“We are entering a new era as the global economic system that has operated during the last 80 years is being restored,” the IMF economist of the IMF Pierre-Loivier Gourinchas told journalists.
The IMF said that the rapid escalation of commercial tensions and “extremely high levels” of uncertainty on future policies would have a significant impact on global economic activity.
“It is quite significant and is reaching all the regions of the world. We are seeing less growth in the US., Less growth in the euro area, a lower growth in China, a lower growth in other parts of the world,” Gourinchas said. Reuters In an interview.
“If we obtain an escalation of commercial tensions between the US and other countries, that will promote additional uncertainty, which will create additional volatility of the financial market, which will harden financial conditions,” he said, and added that the inclined effect would further increase the perspectives of global growth.
The weakest growth prospects had already reduced the demand for the dollar, but the adjustment in the currency markets and the retramical of the portfolio seen to date had been ordered, he said.
“We are not seeing a stampede or a race at the exits,” Gourinchas said. “We are not worried at this stage for the resistance of the international monetary system. Something much bigger would be needed than this.”
However, the medium-term growth prospects remained mediocre, with the five-year forecast stuck at 3.2pc, below the historical average of 3.7pc of 2000-2019, without relief in view in the absence of significant structural reforms.
The IMF reduced its prognosis for the growth of global trade in 1.5 percentage points to 1.7pc, half of the growth seen in 2024, reflecting the accelerated fragmentation of the global economy.
The increase in rates with an increase in tariffs between the United States and China will result in a much lower bilateral trade between the two largest economies in the world, Gourinchas said, he added: “That is weighing the growth of world trade.”
The trade would continue, but it would cost more and would be less efficient, he said, citing confusion and uncertainty about where to invest and where to obtain products and components.
“Restoring predictability, the clarity of the commercial system in any way is absolutely critical,” he said Reuters.
Lower growth in Europe, Asia
The growth of the IMF prognosis in the euro zone will slowerly be 0.8pc in 2025 and 1.2pc in 2026, with both forecasts approximately 0.2 percentage points since January. He said that Spain was an atypical value, with a growth forecast of 2.5 percent by 2025, an ascending review of 0.2 percentage points, which reflects strong data.
The compensation forces included a stronger consumption due to the increase in wages and fiscal flexibility projected in Germany after important changes in their “debt brake.” The IMF reduced its growth forecast for Germany at 0.3 percentage points at 0pc in 2025, and at 0.2 percentage points at 0.9pc in 2026.
Great Britain would reach 1.1PC in 2025, 0.5 percentage points below the January forecast, surpassing 1.4pc in 2026, which reflects the impact of recent rates ads, higher golden yields and weaker private consumption.
Commercial tensions and rates were expected to increase 0.5 percentage points of Japan’s economic activity in 2025, compared to the January forecast, with a projected growth at 0.6pc.
China’s growth forecast was reduced to 4PC by 2025 and 2026, which reflects the respective downward reviews of 0.6 percentage points and 0.5 percentage points from the January forecast.
Gourinchas said that the impact of tariffs on China, enormously dependent on exports, was approximately 1.3 percentage points in 2025, but that was compensated by stronger fiscal measures.
