This situation together with actual or likely policy responses thereto weighs significantly on Pakistan’s economic outlook. According to the International Monetary Fund (IMF)’s World Economic Outlook, April 2022, global economic growth is likely to recede to 3.6% in 2022, as well as in 2023, from 6.1% in 2021. The Bank of England has also raised its prime interest rate by 0.25 percentage point to a 13-year high to ward off inflationary pressures. However, if the increasing trade deficit, which reached $39 billion during FY22 (July-April), forces the introduction of import compression measures, economic growth rate may significantly fall. The increase in interest rate coupled with currency depreciation will add to the cost of debt servicing, the largest component of public spending.

Source: The Express Tribune May 16, 2022 22:48 UTC