Country Economic Forecasts > Pakistan

GDP growth in the 2014/15 fiscal year(July-June) was 4.2%, up from 4% in 2013/14, and the official projection is forexpansion of 5.5% in 2015/16, lifted by rising investment. Our forecast remainsat about 5%, with activity constrained by the impact of ongoing power shortagesand mounting global and regional headwinds, but helped nonetheless by lower oilprices. The pace of growth is seen rising to 5.5-6% in 2017-18 as energyshortages are addressed and as investment picks up, boosted by projects underthe China-Pakistan Economic Corridor (CPEC), which will also lift export growthsharply. Activity will also be helped by the impact of low inflation. Lowerworld oil prices and falling food prices have slashed headline inflation to just1.3% in September. The decline from close to 8% a year ago has enabled the SBPto cut interest rates sharply in the past year, with the policy rate loweredagain in September to 6%. Rates are now at their lowest in over 30 years, helpingeconomic activity and encouraging private sector investment. And the governmentcontinues to make progress under its IMF programme, with the fiscal deficit downto 5.3% of GDP in 2014/15 and the target for 2015/16 set at 4.3%. And the currentaccount deficit is likely to fall to US$1.3bn in 2015 (just 0.5% of GDP), helpedby a lower oil import bill and rising transfers.