Pakistan’s Economic Recovery Under Threat due to urban protests and political instability.

Fitch Business Monitor International has raised concerns that Pakistan’s current political turmoil could disrupt the country’s economic stability.

Webdesk; Pakistan’s Economic Recovery Under Threat, Fitch’s latest report highlights the critical state of Pakistan’s economic recovery, hindered by urban protests and a precarious political climate. Despite legal appeals, the founder of Pakistan Tehreek-e-Insaaf (PTI) is likely to remain imprisoned, indicating a continued coalition government for the next 18 months with no immediate plans for fresh elections.

Economic Growth Projections

Fitch projects Pakistan’s economy to grow by 3.2% in 2024/25, driven by the implementation of IMF-mandated reforms. The policy rate is expected to reach 16% this fiscal year and 14% next year, with the exchange rate stabilizing beyond expectations. The dollar is expected to reach Rs 290 by the end of this year and Rs 310 in 2025.

Challenges Ahead

Achieving budget targets under the IMF program is deemed challenging, although the fiscal deficit is anticipated to decrease from 7.4% to 6.7%. Fitch warns that another potential flood or natural disaster could pose a significant threat to the already fragile economy.

Key Takeaways,

– Pakistan’s economic recovery is under threat due to urban protests and political instability.
– The coalition government is likely to continue for the next 18 months with no immediate plans for fresh elections.
– Economic growth is projected at 3.2% in 2024/25, driven by IMF-mandated reforms.
– Policy rate and exchange rate are expected to stabilize, but budget targets remain challenging.
– Natural disasters pose a significant threat to the fragile economy.