Pakistan’s economy has experienced a significant downturn as conflicts within the country intensify, accompanied by soaring inflation, high interest rates, and a pause in financial aid from the International Monetary Fund (IMF).
The National Accounting Commission of Pakistan has reported that the country’s gross domestic product (GDP) grew a mere 0.29% in the fiscal year ending on June 30. This figure falls drastically short of the initial GDP target of 5%, which was revised down to 2.3% in September due to the devastating floods that occurred last summer.
According to the Pakistan National Bureau of Statistics (PBS), this is the fifth time in history that the economy has grown below 1% since records began in 1952. The previous instance was observed in fiscal year 2020, largely due to the severe impact of the global COVID-19 pandemic on the world economy.
The latest GDP report underscores the immense challenges faced by Pakistani Prime Minister Shehbaz Sharif, who is grappling with efforts to revive a crucial $6.7 billion IMF loan program. The funds are urgently needed to stabilize the economy and prevent default on debt payments, all amidst an ongoing political crisis.
The Pakistani government is contending with sluggish demand as a result of increased taxes, higher energy prices, and deliberate depreciation of the Pakistani rupee, all measures implemented to fulfill the IMF’s requirements.