Country Economic Forecasts > Pakistan

Pakistan continues to make good progress under itsIMF programme, with the fiscal deficit down to 5.3% of GDP in 2014/15 and the targetfor 2015/16 set at 4.3%. And the current account deficit is likely to fall toUS$1.3bn in 2015 (just 0.5% of GDP), helped by a lower oil import bill andrising inflows of transfers. The external deficit will start widening againfrom 2016 as import demand picks up and oil prices start to rise, but shouldnot present any funding problems as long as IMF support continues. However, FDIinflows remain very low at just over US$700m in 2014/15, and reserves are modestat US$18.6bn in early-September despite continuing inflows of IMF funds. GDPgrowth in the 2014/15 fiscal year (July-June) was 4.2%, up slightly from theprevious year, and the official projection is for expansion of 5.5% in 2015/16.Our forecast remains more cautious, at about 5% (the IMF is projecting 4.5%),held down by the impact of ongoing power shortages but assisted by lower oilprices. The pace is seen rising to 5.5-6% a year in 2017-18 as energy shortagesare addressed and investment picks up more strongly, boosted by projects underthe China-Pakistan Economic Corridor (CPEC), which will also lift trade prospects.