Asian Development Bank keeps Pakistan's growth forecast at 3.7pc

The Asian Development Bank (ADB) has projected Pakistan's economic growth rate for fiscal year 2027 at 3.7 percent, falling short of the 4 percent target set by the government. Inflation is expected to rise to 8.3 percent, exceeding the central bank's medium-term target range of 5 percent to 7 percent, primarily due to escalated costs in energy, logistics, and agricultural inputs.

ADB's latest outlook maintains the 3.7 percent growth projection initially announced in July 2026. Factors contributing to the economic forecast include the potential escalation of the Middle East conflict, which could increase energy import costs and exacerbate inflation, as well as the prospect of Pakistan's government implementing austerity measures that might dampen domestic demand.

Other risks highlighted by ADB include tighter global financing conditions, fiscal shortfalls, weather-related agricultural shocks, and delays in energy sector and state-owned enterprise reforms. The bank emphasized that consistent implementation of economic reforms is crucial for enhancing fiscal and external stability and preserving investor confidence.

Despite recent progress in macroeconomic stability, including stronger growth, improved external buffers, and sovereign credit rating upgrades, ADB emphasized that sustained reform momentum is essential to unlock higher private investment, bolster resilience to external shocks, and foster more inclusive growth.