Pakistan's Finance Ministry expects economic growth in the financial year ending in June to hit 3.3%, well below a target of 6.2% set last year, with key sectors all performing worse than expected, according to a planning document seen by Reuters. The document also sets a target of 4% growth for the 2020 financial year, underlining the economic headwinds facing the government of Prime Minister Imran Khan.
The targets are due to be published officially on Monday ahead of the budget on June 11, which is expected to include tough austerity measures following a provisional bailout agreement with the International Monetary Fund. Khan's government came to power in August facing a yawning budget deficit expected at around 7% of gross domestic product as well as a balance of payments crisis, with foreign exchange reserves that cover less than three months of imports.
It has promised reforms to stimulate exports, cut the deficit and overhaul the power sector, and has pushed ahead with an ambitious infrastructure development project with China. But Pakistani households have struggled, with inflation running at more than 9%. Key sectors in Pakistan's economy are all performing below the levels foreseen in last year's budget, which was passed under the previous government of Shahid Khaqan Abbasi. Agriculture is seen growing just 0.8% compared with a 3.8% target, industrial output is set to rise 1.4% against a 7.6% target and services are forecast to grow 4.7%, compared with a target of 6.5%.Imran Khan's worst nightmare will be Pakistan's crumbling economy