The current state of Pakistan's Economy in 2023

• GDP Growth:
• Pakistan’s economy is expected to grow by only 0.4% in the current fiscal year ending June 2023.
• Economic Contraction:
• Pakistan’s economy is estimated to have contracted in FY-23, after two consecutive years of growth.
• GDP Decline:
• Real gross domestic product (GDP) is estimated to have declined by 0.6% in FY-23.
• Inflation:
• Inflation is running at over 30 percent – a 50-year high.
• Poverty Rate:
• The lower middle-income poverty rate is expected to increase to 37.2% in FY-23.
• Economic Crisis:
• The resolution of Pakistan’s economic crisis requires a commitment to sustained macro-fiscal and structural reforms.
• Fiscal Consolidation:
• An inconsistent policy response undermined progress with planned fiscal consolidation.
• Foreign Exchange Reserves:
• Foreign reserves remain at precariously low levels.
• Inflation:
• Inflation is at a record high.
• Private Sector Activity:
• Private sector activity has slowed sharply with deteriorating consumer and investor confidence.
• Unemployment and Inflation Rates:
• Pakistan's unemployment and inflation rates are one of the highest in the region.
• Human Development Index:
• Pakistan is among the 25 countries with the lowest human development in the world.
• Economic Management:
• The country’s current situation has multiple causes, including overall poor economic management.
• Corruption:
• Corruption is one of the factors affecting the economy.
• Defence Spending:
• Excessive spending on defence and the armed forces is another factor.
• Education Investment:
• Investing in the education and technical skills of youth can generate opportunities for a more sustainable economy.
• Flood Impact:
• Last year’s floods caused extensive damage to agricultural land, livestock, thousands of kilometres of road, and other infrastructure.
• Food Inflation:
• The war in Ukraine also halted grain supply to a number of countries, including Pakistan, resulting in a sharp increase in prices of food grains.
• Fiscal Tightening:
• The slower growth reflects subdued private sector activity amid deteriorating confidence, import controls, belated fiscal tightening.
• Global Commodity Prices:
• Over FY-23, Pakistan faced devastating floods and increasing global commodity prices following Russia’s invasion of Ukraine.
• Monetary Tightening:
• An inconsistent policy response, involving monetary tightening, new subsidies, and an informal exchange rate cap.
• Global Liquidity Conditions:
• Rising macro risks and tighter global liquidity conditions curtailed Pakistan’s access to international capital markets.
• Debt:
• Facing increasing debt, rapidly eroding foreign exchange reserves.
• IMF-EFF 9th Program Review:
• Delays with the IMF-EFF 9th program review.
• Government Response:
• The Government recently course-corrected. It reduced subsidy spending, further increased energy tariffs, and allowed the exchange rate to float leading to a sharp depreciation and alignment between the inter bank and open rates.

Pakistan Zindabad