ADB Forecasts: Pakistan's GDP to Grow 2.5%, Inflation Reaches 6%
In April 10, Pakistan is expected to maintain a growth rate of 2.5% in the fiscal year 2025, which will then rise to 3% in the fiscal year 2026. This improvement is anticipated due to the execution of a reform initiative aimed at bolstering private investments, according to the Asian Development Bank (ADB).
In their recent report called "Asian Development Outlook (ADO) April 2025," the bank indicated that Pakistan’s economy is demonstrating indications of stabilization and recuperation with expansion during FY2025, following stringent macroeconomic measures and advancements in fiscal reform initiatives taking effect.
"Pakistan's actual gross domestic product (GDP) is projected to expand by 2.5% in FY2025, maintaining the same growth pace as in FY2024," the report stated.
Furthermore, Pakistan's economy is expected to accelerate to a growth rate of 3.0% in fiscal year 2026.
The prospects for economic growth are improving due to a more stable macroeconomic situation, supported by the IMF’s Extended Fund Facility agreement initiated in October 2024. Strict adherence to the economic reform program is essential for strengthening resilience and fostering sustainable and equitable expansion.
"Pakistan’s economy has gained momentum due to enhanced macroeconomic stability, thanks to strong reforms in sectors like tax policies and the energy industry," stated Emma Fan, ADB Country Director for Pakistan.
Persistence in growth is anticipated for 2025 with an expected upsurge in 2026. Continuous execution of policy changes will be crucial to support this expansion and strengthen both financial and external reserves.
The ADB stated that the projected growth for fiscal year 2025 is anticipated to stem from an upturn in private-sector investments spurred by advancements in reform initiatives, improved sentiments regarding economic stability, and a consistent foreign exchange market.
It was mentioned that the successful execution of the reform initiative is expected to further stabilize the macroeconomic landscape and progressively eliminate structural obstacles to economic expansion.
It was observed that economic activities within both the industrial and service sectors stand to gain from the recent monetary relaxation and overall macroeconomic stability in the nation.
Furthermore, substantial flows of money from foreign workers, reduced price levels, and easier monetary policies are expected to bolster overall demand.
The ADB stated that the forecasted average inflation in Pakistan is expected to drop notably to 6% in FY2025 and then decrease even more to 5.8% in FY2026.
"This is due to ongoing moderation in food price increases, steady global oil and commodity costs, mild domestic demand conditions, and a positive baseline impact," the statement read.