Despite the record high interest rates affecting businesses and reducing consumer demand, Pakistan’s economy still managed to expand by 1% in the October-December period compared to a year ago, according to data from the Pakistan Bureau of Statistics. However, this was lower than the median estimate of 1.8% in a Bloomberg survey. The National Account Committee also revised upward economic growth for the previous quarter to 2.5% from 2.13%.
In terms of sectors, agriculture saw growth of 5.02% from a year ago, while industry contracted by 0.84%. The services sector grew by a minimal 0.01%. Despite efforts to avert a sovereign default last year, the economy has remained fragile. Prime Minister Shehbaz Sharif is seeking a new loan from the International Monetary Fund (IMF) to support the economy and bolster Pakistan’s foreign exchange reserves.
The IMF has lowered its GDP forecast for the current fiscal year to 2% from 2.5% due to weaker domestic demand, but the State Bank of Pakistan is more optimistic, citing better farming and industrial output supporting the economy. Last fiscal year, Pakistan experienced a rare contraction of 0.17%. The nation continues to heavily rely on IMF aid, with $24 billion in external financing needs in the fiscal year starting July, about three times its foreign exchange reserves.