Pakistanis may face an unprecedented level of joblessness during the fiscal year 2021 (July 2020 to June 2021) as the International Monetary Fund (IMF) expects Pakistan’s unemployment rate to rise to 5.1%.
According to the World Bank data on Pakistan’s unemployment rate, which is available since 1991, it will be the highest level the country has faced in its at least 30 years. The trend on the World Bank website shows that unemployment levels remained below 1% from at least 1991 to 2011, reported SamaaTV.
The IMF, in its latest report World Economic Outlook, October 2020: A Long and Difficult Ascent, reported that the unemployment rate will increase from 4.1% and 4.5% in 2019 and 2020 respectively and to 5.1% in 2021.
The main reason for the high unemployment rate is that Pakistan faced an economic contraction for the first time in 68 years, mainly due to the COVID-19 pandemic. The economy contracted by -0.4% in 2020. The IMF report has also forecast that Pakistan’s GDP would recover a slow pace of 1% in 2021.
Meanwhile, the prices of consumer goods and services or inflation would decrease to 8.8% in 2021 from 2020’s 10.7%, according to the report.
Contrary to recent improvements Pakistan made to its current account balance when it recorded a surplus for four months during the previous fiscal year, the IMF predicts that the country would again record a higher current account deficit in 2021.
A negative current account balance is called a current account deficit and a positive current account balance is called a current account surplus.
The current account balance was improved to -1.1% in 2020 from -4.9% in 2019 after the government took several measures to halt imports during 2020. But the IMF forecasts that the country’s current account balance will deteriorate again to -2.5% in 2021.