The latest IMF's World Economic Outlook report presents a grim picture on Pakistan’s economy. The report predicts that Pakistan’s gross domestic product may decline to 3.5 percent and the inflation rate may speed up to 23 percent in the fiscal year (2008-09).

For the fiscal year of 2007/08, the country registered a growth rate of 5.8 percent and for the current fiscal it has set a target growth rate of 5.5 percent. 

In a press release IMF said, “the main concern is that a buildup of stress in the global financial system and a sharper than anticipated global slowdown could further weigh activity," for emerging countries such as Pakistan.

The inflation rate for the month of August stood at a whopping 25 percent. The country this year has set a target of 12.0 percent for inflation for the year ending June 30, 2009. However, IMF anticipates that full year inflation to end at an annual average of 23.0 percent.

The report further added, “Capital flows to some countries have become more volatile, particularly to those running sizeable external deficits. Their currencies have come under pressure, prompting the central bank to intervene in support (India, Pakistan and Vietnam).”