ADB expects Pakistan's GDP growth at 3.7% in FY27 as Middle East conflict weighs on economy

The Asian Development Bank (ADB) anticipates Pakistan's GDP growth to remain steady at 3.7% in the fiscal year 2027 (FY27). However, the lingering effects of the Middle East conflict are expected to dampen macroeconomic momentum. Inflation is projected to rise to 8.3% in FY27, surpassing the central bank's medium-term target range of 5%-7%.

The ADB cites higher energy and logistics costs, pressure on the exchange rate, and tariff reductions on industrial inputs under the National Tariff Policy 2025-2030 as factors that could improve the investment climate. Private investment is seen as the primary demand driver, driven by the 8.6% real expansion in FY2026. The ADB also predicts that services, particularly information technology exports, will remain resilient, while manufacturing faces slower momentum due to elevated energy prices.

However, household spending is likely to remain subdued due to the pass-through of high global energy prices. The current account deficit is expected to widen amidst heightened geopolitical tensions and recovering domestic demand. Pakistan's gross international reserves are projected to exceed $21 billion by the end of June 2027, providing near-term external stability.