{"id":42802,"date":"2025-04-23T03:36:15","date_gmt":"2025-04-23T03:36:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/42802\/"},"modified":"2025-04-23T03:36:15","modified_gmt":"2025-04-23T03:36:15","slug":"imf-lowers-pakistans-gdp-growth-estimate-to-2-6pc-in-wake-of-century-high-us-tariffs-business","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/42802\/","title":{"rendered":"IMF lowers Pakistan\u2019s GDP growth estimate to 2.6pc in wake of century-high US tariffs – Business"},"content":{"rendered":"

The International Monetary Fund (IMF) on Tuesday slashed its growth forecast for Pakistan to 2.6 per cent, citing the impact of US tariffs<\/a> now at 100-year highs and warning that rising trade tensions would further slow growth.<\/p>\n

The IMF released an update to its World Economic Outlook<\/a> compiled in just 10 days after US President Donald Trump announced universal tariffs on nearly all trading partners and higher rates, currently suspended, on many countries. Pakistan was hit by a 29pc tariff<\/a> on goods it exports to the US, which economists say could bring immediate hurdles but also long-term opportunities.<\/p>\n

In January, the IMF had lowered<\/a> the country\u2019s growth estimate to 3pc for the current fiscal year, down from 3.2pc it had projected previously.<\/p>\n

In its latest update, the IMF slashed the growth estimate to 2.6pc for the current fiscal year and 3.6 for the next fiscal year. It also put the inflation estimate at 5.1pc and 7.7pc for the current and next fiscal years.<\/p>\n<\/p>\n

The increase in trade tariffs on Pakistani products could have a devastating impact on Pakistan\u2019s important exports and serves as a wake-up call for diversification, according to a state-owned think tank.<\/p>\n

\u201cA storm may be brewing on Pakistan\u2019s trade horizon,\u201d the Pakistan Institute of Development Economics (Pide) said last week, adding that the \u201cproposed reciprocal tariffs by the United States could have a devastating impact on the country\u2019s export sector\u201d.<\/p>\n

In a stark policy note, the institute cautioned that these tariffs could lead to macroeconomic instability, significant job losses and a critical reduction in foreign exchange earnings.<\/p>\n

Global projections<\/p>\n

Meanwhile, it cut its forecast for global growth by 0.5 percentage point to 2.8pc for 2025, and by 0.3 percentage point to 3pc from its January forecast that growth would reach 3.3pc in both years.<\/p>\n

It said inflation was expected to decline more slowly than expected in January, given the impact of tariffs, reaching 4.3pc in 2025 and 3.6pc in 2026, with \u201cnotable\u201d upward revisions for the US and other advanced economies.<\/p>\n

The IMF called the report a \u201creference forecast\u201d based on developments through April 4, citing the extreme complexity and fluidity of the current moment.<\/p>\n

\u201cWe are entering a new era as the global economic system that has operated for the last 80 years is being reset,\u201d IMF chief economist Pierre-Olivier Gourinchas told reporters.<\/p>\n

The IMF said the swift escalation of trade tensions and \u201cextremely high levels\u201d of uncertainty about future policies would have a significant impact on global economic activity.<\/p>\n

\u201cIt\u2019s quite significant and it\u2019s hitting all the regions of the world. We\u2019re seeing lower growth in the US, lower growth in the euro area, lower growth in China, lower growth in other parts of the world,\u201d Gourinchas told Reuters in an interview.<\/p>\n

\u201cIf we get an escalation of trade tensions between the US and other countries, that will fuel additional uncertainty, that will create additional financial market volatility, that will tighten financial conditions,\u201d he said, adding the bundled effect would further lower global growth prospects.<\/p>\n

Weaker growth prospects had already lowered demand for the dollar, but the adjustment in currency markets and portfolio rebalancing seen to date had been orderly, he said.<\/p>\n

\u201cWe are not seeing a stampede or a run to the exits,\u201d Gourinchas said. \u201cWe\u2019re not concerned at this stage about the resilience of the international monetary system. It would take something much bigger than this.\u201d<\/p>\n

However, medium-term growth prospects remained mediocre, with the five-year forecast stuck at 3.2pc, below the historical average of 3.7pc from 2000-2019, with no relief in sight absent significant structural reforms.<\/p>\n

The IMF slashed its forecast for growth in global trade by 1.5 percentage point to 1.7pc, half the growth seen in 2024, reflecting the accelerating fragmentation of the global economy.<\/p>\n

Sharply increased tariffs<\/a> between the US and China will result in much lower bilateral trade between the world\u2019s two largest economies, Gourinchas said, adding, \u201cThat is weighing down on global trade growth.\u201d<\/p>\n

Trade would continue, but it would cost more and it would be less efficient, he said, citing confusion and uncertainty about where to invest and where to source products and components.<\/p>\n

\u201cRestoring predictability, clarity to the trading system in whatever form is absolutely critical,\u201d he told Reuters.<\/p>\n

Lower growth in Europe, Asia<\/p>\n

The IMF forecast growth in the Euro Area would slow to 0.8pc in 2025 and 1.2pc in 2026, with both forecasts about 0.2 percentage points down from January. It said Spain was an outlier, with a 2.5pc growth forecast for 2025, a 0.2 percentage point upward revision, reflecting strong data.<\/p>\n

Offsetting forces included stronger consumption due to rising wages and a projected fiscal easing in Germany after major changes to its \u201cdebt brake\u201d. The IMF cut its growth forecast for Germany by 0.3 percentage point to 0pc in 2025, and by 0.2 percentage point to 0.9pc in 2026.<\/p>\n

Growth in Britain would hit 1.1pc in 2025, 0.5 percentage point below the January forecast, edging higher to 1.4pc in 2026, reflecting the impact of recent tariff announcements, higher gilt yields and weaker private consumption.<\/p>\n

Trade tensions and tariffs were expected to shave 0.5 percentage point off Japan\u2019s economic activity in 2025, compared to the January forecast, with growth projected at 0.6pc.<\/p>\n

China\u2019s growth forecast was cut to 4pc for 2025 and 2026, reflecting respective downward revisions of 0.6 percentage point and 0.5 percentage point from the January forecast.<\/p>\n

Gourinchas said the impact of the tariffs on China, hugely dependent on exports, was about 1.3 percentage points in 2025, but that was offset by stronger fiscal measures.<\/p>\n","protected":false},"excerpt":{"rendered":"The International Monetary Fund (IMF) on Tuesday slashed its growth forecast for Pakistan to 2.6 per cent, citing…\n","protected":false},"author":2,"featured_media":42803,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,23938,16,15],"class_list":{"0":"post-42802","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-trump-2-0","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114385189829496206","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/42802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=42802"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/42802\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/42803"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=42802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=42802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=42802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}