By Staff Reporter
KARACHI: The International Monetary Fund projected Pakistan’s economic growth at 3.6% for the fiscal year 2025-26, falling short of the government’s 4.2% target, while nudging up its estimate for the prior year to 2.7%.
In its latest report, World Economic Outlook Update, Global Economy: Tenuous Resilience amid Persistent Uncertainty, the IMF forecast Pakistan’s GDP growth at 3.6% for 2025-26, a figure that trails Islamabad’s more ambitious 4.2% goal. The fund also revised its estimate for the fiscal year 2024-25 upward by 0.1 percentage point to 2.7%, edging slightly above the Finance Division’s claim of 2.68% growth reported in its June 2025 monthly economic outlook.
Other multilateral lenders have chimed in with their own projections. The World Bank anticipates Pakistan’s GDP growth at 3.1% for fiscal year 2026, while the Asian Development Bank (ADB) pegs it at 3% for the same period. The ADB also lifted its forecast for fiscal year 2025 to 2.7% from an earlier 2.5%, aligning closely with the IMF’s revised figure for 2024-25.
Meanwhile, the IMF offered a broader view of the world economy, projecting global growth at 3% for 2025 and 3.1% for 2026. These figures mark a modest upgrade from its April 2025 outlook, with the 2025 forecast rising by 0.2 percentage point and the 2026 estimate ticking up by 0.1 point.
The fund pointed to several drivers behind the revision: “This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions,” the report said.
Inflation remains a key focus. The IMF expects global headline inflation to ease to 4.2% in 2025 and 3.6% in 2026, a trajectory that mirrors its April projections. Yet, the report highlighted stark differences across regions: “The overall picture hides notable cross-country differences, with forecasts predicting inflation will remain above target in the United States and be more subdued in other large economies.”
Back home, Pakistan’s Finance Ministry offered its own take, projecting July inflation at 3.5% to 4.5% as price pressures begin to cool.
Still, the IMF sounded a note of caution. “Risks to the outlook are tilted to the downside,” it warned, echoing concerns flagged in its April 2025 World Economic Outlook.
Against this global backdrop, Pakistan’s growth projections underscore the hurdles it faces in hitting its lofty targets amid lingering uncertainties. The gap between the IMF’s 3.6% forecast and the government’s 4.2% ambition signals a need for tempered expectations and disciplined economic stewardship. While the slight upward revision for 2024-25 offers a glimmer of resilience, the broader outlook suggests that Islamabad’s plans may be tested by both domestic and external headwinds.
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