ADB forecasts 3% GDP growth for Pakistan in FY2026

September 30, 2025 (MLN): Pakistan’s real gross domestic product (GDP) growth is forecast at 3.0% for FY2026, supported by improving macroeconomic stability and rising investment under continued policy reforms, according to the Asian Development Bank (ADB).

In its Asian Development Outlook (ADO) September 2025, ADB noted that economic momentum is expected to continue in the medium term as reforms address structural vulnerabilities.

Progress under the IMF Extended Fund Facility, which began in October 2024, has strengthened policy credibility, while climate resilience and policy consistency remain vital to sustaining growth.

“Pakistan’s growth prospects remain positive,” said ADB Country Director for Pakistan Emma Fan. “However, the country continues to face structural challenges, compounded by recurring disasters such as the recent floods. Consistent reforms and strong implementation are key to reinforcing momentum and resilience.”

ADB highlighted that economic activity in FY2026 will be supported by improved external buffers and renewed business confidence following the US-Pakistan trade agreement.

At the same time, flood-related damage to infrastructure and farmland may weigh on growth, though recovery efforts and fiscal incentives for the construction sector revealed in the FY2026 budget are expected to provide partial relief.

Inflation is projected to rise to 6.0% in FY2026 due to supply chain disruptions and higher gas tariffs.

The central bank is expected to cautiously manage monetary policy to maintain inflation within its 5%–7% medium-term target range.

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