Growth forecasts

The Asian Development Bank has forecast Pakistan's economic growth for the current fiscal year at 3.7 percent, which is lower than the government's prediction of 4 percent and matches the provisional growth rate of 2025-26 as per the Pakistan Bureau of Statistics. The World Bank and the International Monetary Fund have forecasted growth rates of 3.2 percent and 3.5 percent respectively for the same period.

These discrepancies in growth projections may be due to different time frames, assessments of conflict outcomes in the Middle East, and Russia-Ukraine war, and the assumption of Pakistani authorities adhering to IMF policies. The IMF team is currently in-country to discuss the fourth quarterly review and the next tranche release.

Inflation is projected at 8.3 percent by the ADB, 8.2 percent by the World Bank, and 8.4 percent by the IMF. However, Pakistani authorities anticipate higher inflation rates of 9.2 percent in July and 11.2 percent in August. Despite this, the State Bank of Pakistan has not adjusted its medium-term projection of 5-7 percent for inflation.

The basis for GDP growth can be attributed to the industry growth rate, which increased from 1.96 percent in 2024-25 to 6.61 percent in 2025-26. However, this growth is challenging for large-scale manufacturing, which claims that input costs have risen due to IMF-imposed tariff hikes to meet full cost recovery criteria. The private sector's credit growth is also negative, partly due to a policy rate more than double the regional competitors' rates.

The textile sector's closure of over 100 units is a testament to the lack of industrial output growth. Inflation, as projected by the authorities, is expected to be significantly higher than the multilateral projections, which could impact the government's ability to make timely policy decisions.