The Economic Intelligence Unit (EIU) has predicted a nine year low for the GDP growth of the country. In a report published by the agency recently, it has been revealed that the economic growth of Pakistan is likely to take a severe beating in the current fiscal year. The report cites various reasons behind this slow down of the economy such as fall in the value of Pakistani Rupee, squeeze on budgetary allocations on development, and the impending balance of payments crisis. The report says that all these factors combined together would pout brakes on investment and domestic consumption.
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According to this report by EIU, the economic growth of Pakistan will be hit by the efforts of the government to rectify the worsening situation of the balance of payments problem. EIU happens to be the research an analysis wing of The Economist Group. The predictions of EIU for the next three years also do not hold any promise as the report says that the average growth rate of Pakistan’s GDP for 2019-2022 will likely remain pegged at 2.9%.
EIU says that the slowdown in GDP growth would be a direct result of the cuts proposed by the IMF in social spending and planned development. The spending cuts are expected to be announced by the government in near future. Because of these funding cuts, consumption in both government as well as private sectors is likely to slow down.
Government plans to introduce curbs on imports of non essential items. This would put brakes on investments in imports for the next two years. Growth of imports will pick up once again after 2022 when Pakistan comes out of the bailout program of the IMF.
EIU report paints a gloomy picture about inflation also. It says that the free fall of the Pakistani Rupee will put serious pressure on the rate of inflation across the country.