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The IMF’s World Economic Outlook says things could get even worse and is not very keen on its own positive prediction for 2021. While predicting 5.8% global growth in the year 2021, it claims, “Even after the severe downgrade to global growth, risks to the outlook are on the downside,” and that “the effects of the health crisis on economic activity and financial markets could turn out to be stronger and longer-lasting.” The risk would be “severe” if bringing the pandemic under control took longer than what the IMF estimated, or if there was another wave of infections at any time during the next year. According to the Fund’s chief economist, global gross domestic product could fall by as much as $9 trillion — almost 10% — by the end of the year 2021.
And that is still not the worst-case scenario. Under such circumstances, to say the economic future for Pakistan looks grim would be considered a positive statement. A new World Bank estimate has already suggested that Pakistan’s economy may actually shrink by 2.2%, revising its already low 1% growth estimate from last week. Negative growth in a developed economy is a problem. In a developing economy, it is a recipe for disaster. The only good news may be that the IMF is also calling an executive board meeting on April 16 to consider disbursement of another loan of $1.4 billion to Pakistan to boost foreign exchange reserves and extend budgetary support in the wake of the Covid-19 economic slowdown.
Published in The Express Tribune, April 16th, 2020.
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