Unemployment and inflation are likely to increase in Pakistan, IMF
The International Monetary Fund (IMF) has released the World Economic
Outlook report and has expressed concern regarding Pakistan that the growth
rate from the current financial year will be lower than last year as well as
increase in unemployment and inflation.
Is. According to the IMF report, there is a
fear of unemployment, rising inflation and declining economic growth in
Pakistan. The World Organization has said that there is a possibility of
reduction in the current account deficit in Pakistan during the current
financial year. The report states that the average rate of inflation in
Pakistan this fiscal year is likely to be 19.9 percent, while the average rate
of inflation last year was 12.1 percent. The IMF said that the economic growth
rate is likely to be 3.5 percent this fiscal year, but the economic growth rate
was recorded at 6 percent in the last fiscal year.
Regarding unemployment,
it has been said that the unemployment rate in Pakistan this year is estimated
to be 6.4% which was recorded at 6.2% in the last financial year. Regarding
Pakistan, it has been further informed that Pakistan's current account deficit
may reach 2.5% which was 4.6% in the last financial year. ###Warning to global
economies, low growth rate The IMF has also warned that global economies, which
are struggling due to Russia's intervention in Ukraine, may face a slowdown in
growth.
According to the report of the news agency
AFP, IMF economist Pierre-Olivier Gorenchas wrote in an article regarding the
economic outlook that the effects of this year will freshen the economic
wounds, which had partially improved after the global epidemic. . He warned
that more than one-third of the world's economy is going into a recession this
year and next year, and the three major economies like the United States, the
European Union, and China will continue to freeze.
The IMF expert said the
worst is yet to come and many will face recession-like conditions in 2023. The
World Organization has said in its report that the global GDP growth rate is
expected to be 2.7 percent in 2023, which is 0.2 point from July's
expectations. The global growth rate estimate for this year remains at 3.2
percent. The IMF said the global growth situation is the weakest since 2001,
which included the global financial crisis and the worst of the pandemic.
While warning the
world's major economies, the IMF has predicted a decline in the world's two
largest economies, the United States and China. The IMF says that the growth of
the US economy this year is currently at 1.6 percent, which is 0.7 points lower
than the IMF forecast in July. In this regard, it was said that the reason for
this was the unexpected decline in GDP in the second quarter. The world body
said that China's economy is expected to improve by 3.2 percent this year, but
this is the slowest rate in decades. China has warned that a breakdown in the
property sector could weigh heavily on the local banking sector and have a profound
impact on economic growth. The IMF has expressed concern over the economies of
European countries, where the economy of Germany and Italy is suffering from a
severe crisis due to gas disruptions from Russia.
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Moody's also downgrades 5 Pakistani banks
Moody's Investors Service has
downgraded the long-term deposit ratings of five banks in Pakistan from 'B3' to
'CAA One'.
In a statement issued by Moody's, it was said
that 5 banks of Pakistan, Allied Bank Limited (ABL), Habib Bank Limited (HBL),
MCB Bank Limited (MCB), National Bank of Pakistan (NB P) and United Bank
Limited's (UBL) long-term deposit rating has been downgraded. Moody's has also
downgraded the long-term foreign currency counterparty risk ratings (CRR) of
the banks from B3 to CAA1, the statement said. Moody's has downgraded the
baseline credit assessments of ABL, MCB and UBL from B3 to CAA1 as part of the
rating action and as a result their long-term local currency C RRs have been
downgraded from B2 to B3 and their long-term counterparty risk assessments from
B2 (Credit) to B3 (Credit)'.
The statement said that
'BCEs of NBP and HBL have been confirmed on CAA One'. In a statement on the
website, it was said that the outlook on deposits of all these banks will
remain negative. It may be noted that earlier Moody's downgraded Pakistan's
local and foreign currency and unsecured debt ratings from B3 to CAA1. In a
statement regarding the downgrade of Pakistani banks' ratings, Moody's said the
ratings reflect the government's ability to support banks, which has affected
banks whose ratings benefited from government support. , among them are NBP and
HBL.
Moody's said high credit linkages between banks' balance
sheets and sovereign credit risk and Pakistan's foreign currency ceiling CAA
One has impacted the foreign currency CRR of all rated banks. The statement
said that the bond rating has moved from B3 to CAA1 due to the deterioration of
the Pakistani government's ability to support banks in times of need.
"As a result, the government's support
to improve the deposit ratings of NBP and HBL was no longer effective,"
the statement said. Moody's said the negative outlook on the banks' ratings was
mainly due to the large holdings of sovereign debt securities by rated banks,
which are between 7 and 14 times their Tier 1 capital, a measure of their
creditworthiness.
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will continue to link to but their ratings are on a negative outlook. The
outlook also shows increasing risks to banks' financial viability and credit
profile linked to Pakistan's macroeconomic pressures and operating conditions,
and macroeconomic pressures will help Moody's assess Pakistan's macro profile,
the statement said. And at the moment it is extremely weak.