Pakistan Is Now Moving Towards Growth: Fitch

Fitch reports that Pakistan's high interest rate played a key role in tackling Pakistan's high inflation rate and brought stability to the market, and as well, it also tickled down the inflation rate. Fitch says that it is expected that Pakistan will be on a path towards growth now. Moreover, Fitch says that it is expected that Pakistan's growth rate will be near around 3.0% for this fiscal year.

Fitch reports that the reforms Pakistan made in 2023 regarding the foreign exchange market are now showing their signs as remittance inflows are increasing significantly, which has helped to ease down inflation. Fitch reports that remittance inflows and exports increased, which has helped the Pakistani currency to remain stable, and helped to counter inflation.

Fitch reports that the increase in agricultural exports and remittance inflows is the main reason for recent years of the current account deficit now converting into a surplus during this fiscal year.

Fitch reports that growth in the private sector is also a positive sign, and now Pakistan will move towards a growth path due to the positive monetary policy adopted by the State Bank of Pakistan. Moreover, Fitch reports that large-scale manufacturing is now becoming positive, which was negative last year.

Fitch reports that Pakistan will outperform the targets set by the IMF regarding foreign exchange reserves due to a surprise current account surplus, less borrowing for external financing, an increase in exports, and remittance inflows. This has changed the wind's direction for Pakistan regarding external financing needs, as reported by Fitch.

However, Fitch reports that Pakistan will require structural reforms, which remain the key for the current IMF program, and Fitch also reports that being unable to meet the tax target set by the IMF could be a concern for the IMF.