In a promising outlook for Pakistan’s economy, the United Nations Economic and Social Survey of Asia and the Pacific 2024 predicts an acceleration in economic growth for Pakistan in 2024 and 2025. According to the survey released by the UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP), Pakistan is expected to see real GDP growth of 2% in 2024, increasing to 2.3% in 2025. Moreover, the country is projected to experience a significant ease in inflation, dropping from 26% in 2024 to 12.2% in 2025.
The report acknowledges the challenges Pakistan faced due to political unrest and a massive flood that disrupted agricultural production, negatively impacting business and consumer sentiment. However, an agreement with the International Monetary Fund in mid-2023, coupled with additional assistance from China, Saudi Arabia, and the United Arab Emirates, has helped Pakistan regain some macroeconomic stability.
Fiscal adjustments, including the removal of subsidies for the power sector, are highlighted as steps toward restoring economic stability. Despite low tax levels in Pakistan, the report notes moderate tax gaps, suggesting that improved tax policies and administration alone may not suffice to bridge the development financing gaps in low-tax countries. Enhanced socioeconomic development and public governance are deemed essential for larger-scale tax revenue enhancement.
The survey also emphasizes the urgent need for affordable and long-term financing for developing countries in the Asia-Pacific region. It suggests that donors prioritize development financing needs over political interests and calls for multilateral development banks to bolster their lending capacities through fresh capital injections. Moreover, it recommends that credit rating agencies adopt a long-term perspective, recognizing that public investments in shared development ambitions can increase fiscal credibility over time.
Digitalizing tax administration and policies to boost the willingness to pay taxes are highlighted as untapped potentials for stronger public revenue collection. The development of more robust capital markets is also encouraged to unlock significant domestic savings for investments in the Sustainable Development Goals (SDG).
UN Secretary-General Antonio Guterres and UN-ESCAP Executive Secretary Armida Salsiah Alisjahbana both stress the importance of strategic public debt deployment in investments for SDGs, debunking the misconception that higher public debt levels lead to increased debt distress. Such investments are seen as beneficial not only to people and the environment but also as a means to reduce public debt ratios over the long term.
The survey further finds that average economic growth in the developing Asia-Pacific region has rebounded, and it highlights the challenges of uncertain inflation and interest rate trends, geopolitical tensions, and trade fragmentation faced by regional economies. With a significant shift from official to private creditors in the region, the report underscores the importance of strengthening tax revenue collection and boosting domestic savings to finance sustainable development investment needs effectively.
This UN report offers a comprehensive analysis of the current economic landscape in Pakistan and the broader Asia-Pacific region, providing valuable insights into potential growth trajectories and policy recommendations to navigate the challenges ahead.
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