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IMF outlook projects lower inflation rates for Pakistan

Says Afghan refugee crisis could cost $500 million to Pakistan

SAMAA | - Posted: Oct 20, 2021 | Last Updated: 2 months ago
Posted: Oct 20, 2021 | Last Updated: 2 months ago

The International Monetary Fund (IMF) has released its regional economic outlook, projecting lower inflation rates for Pakistan in comparison to other countries. However, it has also warned that a possible Afghan refugee crisis could cost Pakistan half a billion dollars annually.

The outlook for the middle-east and central Asian countries comes as the world recovers from the effect of the covid-19 pandemic.

The IMF ranks Pakistan among emerging markets and middle-income countries (EM&MIs). It said the GDP for these nations is projected to “expand by 3.6 percent in 2021 and rise further by 4.2 percent in 2022, remaining below growth rates projected for global EM&MIs in 2021 and 2022 (6.7 percent and 5.1 percent, respectively).”

The IMF said, “Inflation is projected to increase in all EM&MIs,
except in Pakistan.”

“Overall, inflation for [EM&MIs] is expected to remain above 7.5 percent in 2021–22, before gradually declining to 6.0 percent over the medium term,” the IMF said.

The IMF says international food prices, the evolution of exchange rates and oil prices will be important factors behind inflation dynamics in countries with flexible exchange rates.

It said public debt would increase before decreasing in 2026. Pakistan’s public debt is currently at 80% of the GDP. IMF predicts that it will come down to 60% of the GDP by 2026.

The IMF also warned that a possible refugee crisis in Afghanistan is likely to increase the burden of refugees on Pakistan and other countries.

Pakistan will have to bear additional costs of $500 million annually, according to the IMF, which based its projection on the possibility that around one million Afghans may leave Afghanistan for neighbouring nations including Iran and Tajikistan.

Tajikistan will have to bear $100 million and Iran $300 million annually.

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Pakistan IMF outlook, Pakistan inflation projection, Pakistan Afghanistan,

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