ADB, World Bank and IMF: Pakistan's growth forecasts

EDITORIAL: Asian Development Bank has forecast Pakistan’s growth for the ongoing fiscal year at 3.7 percent – 0.3 percent lower than the government forecast for the year at 4 percent and identical to the growth rate (provisional) for 2025-26 as noted on the Pakistan Bureau of Statistics (PBS) website with the size of the economy calculated at 4523.1 billion dollars with per capita income at 1901 dollars.

The World Bank has forecast our growth at 3.2 percent for the current year while the International Monetary Fund (IMF) has projected the growth rate at 3.5 percent. These different projections maybe partly attributable to the different periods that the projections were made, inclusive of an assessment that must have been made by each multilateral on the projected end of the conflicts in the Middle East as well as between Russia and Ukraine; and partly due to the assumption that Pakistani authorities will continue to adhere to all the policies (structural benchmarks and time bound conditions) agreed with the IMF under the ongoing programme, that are severely contractionary, and therefore anti-growth.

The IMF team is currently in-country to deliberate on the fourth quarterly review and the third review of the Resilience and Sustainable Fund and a staff level agreement would have to be reached before staff submits it to its Board for approval of the next tranche release. There are some concerns as to whether the Fund staff would insist on withdrawing concessions recently extended on petrol to motorcyclists and with cars under 800cc though the amount is no more than 75 billion rupees, 4.4 percent of the total budgeted collections under the budgeted Petroleum Levy or raising taxes to meet the shortfall or indeed to slash expenditure on the public sector development programme, which has negative implications on growth.

The basis behind the increase in GDP can be laid squarely on the growth rate for industry – rising from 1.96 percent in 2024-25 to a whopping 6.61 percent in 2025-26 – a rise that has been challenged by large scale manufacturing sector who maintain that they have been subjected to a massive rise in input costs (due to the insistence of the IMF to take administrative decisions and thereby raise the tariffs to meet the criteria of full cost recovery); and a negative growth in credit to the private sector partly due to a policy rate that is more than double that of our regional competitors with data uploaded by the Finance Division revealing that flow of credit to the private sector was negative 232.1 million rupees July 15 August 2025 and declined to negative 393.4 million rupees in the comparable period this year. The textile sector alone cited the closure of more than 100 units as proof that industrial output has not increased.

The ADB projected inflation at 8.3 percent in the current year against the World Bank projection of 8.2 percent and the IMF at 8.4 percent. While there appears to be a greater synchronicity between multilaterals in projecting inflation relative to growth yet what is relevant is that Pakistan authorities have projected an inflation much higher – at 9.2 percent in July and 11.2 percent in August and at this rate it would be well above the projections made by the multilaterals though the State Bank of Pakistan in its Monetary Policy Statement has not changed its medium term projection of between 5 to 7 percent – a projection that allows it not to further tighten the monetary policy by raising the policy rate from the existing 11.5 percent.

To conclude annual projections may not be achieved by the end of the year as external and internal factors impinge on forecasts however care must be taken to ensure that statistics reflect the ground realities and not the wishes of the administration to ensure that the government can take timely policy decisions to mitigate the possibility of poor performance of any macroeconomic indicator.

Copyright Business Recorder, 2026