ISLAMABAD: The World Bank has projected GDP growth rate for Pakistan at 3.1 per cent for the next fiscal year 2026 compared to the government’s target of 4.2 per cent.
The bank in its latest report, “Global Economic Prospects”, projected GDP growth rate at 2.7 per cent for the current fiscal year – down by 0.1 per cent from earlier projection of 2.8 per cent in January 2025.
In Pakistan, growth is estimated to have inched up to 2.7 per cent in fiscal year 2024-25 (July 2024 to June 2025), from 2.5 per cent in the previous fiscal year, with modest expansions in both agricultural production and industrial output.
In Pakistan, growth is expected to strengthen to 3.1 per cent in fiscal year 2025-26 and 3.4 per cent in fiscal year 2026-27. With inflation contained and borrowing costs declining, industrial and services activity is forecast to firm, and business confidence is anticipated to continue improving owing to reduced domestic policy uncertainty. However, projected growth will remain subdued, reflecting still-high—though easing—real interest rates and fiscal consolidation intended to mitigate vulnerabilities and rebuild policy buffers. In Pakistan, headline inflation fell below 2 per cent in early 2025, the report noted. Inflation in Pakistan is expected to increase amid strengthening demand, the report added.
The report further noted that in Pakistan, an increase in the merchandise trade deficit in April largely reflected a sharp decline in exports, which was in part attributable to increases in U.S. import tariff rates in early April. Credit growth has increased in Pakistan and Sri Lanka, accompanied by recovering domestic demand and lower policy interest rates.
Copyright Business Recorder, 2025
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