The Asian Development Bank (ADB) has projected Pakistan’s economic growth at 3% for the fiscal year 2026, maintaining its earlier forecast. This outlook reflects cautious optimism, driven by stronger-than-anticipated performance in the industrial and services sectors, despite challenges in agriculture. For FY2025, the ADB revised Pakistan’s GDP growth estimate slightly upward to 2.7% from 2.5%, citing improved output in key sectors. However, this falls short of the government’s ambitious 4.2% target for the year.
Inflation in Pakistan is expected to ease, with a downward revision for FY2025 due to a significant drop in food and non-food prices over the first 11 months of the fiscal year. The ADB projects inflation at 5.8% for FY2026, aligning with trends of moderating domestic demand and stable global commodity prices. This comes as a relief for policymakers grappling with economic stabilization.
Despite the positive revisions, Pakistan’s growth remains the slowest in South Asia, trailing behind economies like India, projected at 6.5% for FY2025. Global trade uncertainties, particularly new U.S. tariffs, pose risks to the region’s economic momentum. Posts on X reflect mixed sentiments, with some analysts noting that Pakistan’s cumulative GDP growth lags behind population growth, signaling persistent economic pressures.
The ADB emphasizes that sustained reforms, including those under the IMF’s Extended Fund Facility started in October 2024, are vital for long-term stability. These include tax policy changes and energy sector improvements, which have bolstered macroeconomic conditions. However, vulnerabilities such as debt sustainability and political uncertainties could hinder progress if not addressed.
Published in SouthAsianDesk, July 24th, 2025
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