Leading Issues in the Economy of Pakistan: Agenda for Reforms 4.1 The Global Economy The Russia-Ukraine War is one of the reasons for a big change in the outlook of the global economy. The resulting supply shortages have led to a large spurt in the rate of inflation in international commodity prices in 2022. As shown in Table 4.1, the overall global commodity price index went up by over 40 percent. Table 4.1: Projections of Global Commodity Prices in 2023* 2021 2022 Overall Commodity Price Index (2016= 100) 161.3 227.2 FUEL Petroleum(Brent)$/bbl 70.3 100.5 Coal(2016= 100) 199.4 516.5 LNG$/MMBtu 18.6 40.5 FOOD Wheat$/MT 265.7 348.0 Rice$/MT 442.0 422.8 Palm Oil$/MT 1078.5 1209.7 RAW MATERIALS Cotton US Cents/lb 101.2 140.0 Source: IMF*Calendar year g(%) 40.8 43.0 159.1 117.7 31.0 -4.4 12.2 38.3 2023 225.3 g(%) -1.0 88.6 485.2 57.4 317.9 438.2 958.4 120.7 -11.9 -6.1 41.7 -8.6 3.6 -20.8 -13.8 Developed countries had earlier followed expansionary monetary and fiscal policies after COVID-19, which had a lagged impact on the rate of inflation in 2022. As such, the global economy is in the grips of‘stagflation’. Table 4.2 indicates that the IMF expects in its latest World Economic Outlook that the growth rate of the global economy will come down sharply from 6 percent in 2021 to 3.2 percent in 2022 and decline further to 2.6 percent in 2023. Simultaneously, the rate of inflation will jump up from 4.7 percent in 2021 to 8.8 percent in 2022 and 6.5 percent in 2023. Table 4.2: Projections of the Global Economy Unit Global GDP% Rate of Inflation% Trade Volume% Source: IMF 2021 (Actual) 6.0 4.7 10.1 2022 3.2 8.8 4.3 2023 (Projections) 2.6 6.5 2.5 48