ADB slashes Pakistan FY27 growth forecast

July 09, 2026 (MLN): The Asian Development Bank (ADB) has estimated Pakistan's economy expanded by 3.7% in FY2025-26, supported by improved performance in the industrial and services sectors, along with moderate growth in agriculture.

In its Asian Development Outlook (ADO) July 2026, released on Thursday, the ADB said economic activity strengthened across major sectors during the fiscal year ended June 30, 2026,

The lender has, however, revised Pakistan's FY2026-27 GDP growth forecast downward to 3.7%, citing the impact of higher energy prices and increasing pressure on workers' remittances, which are expected to dampen economic activity.

The ADB also raised its inflation outlook for Pakistan, projecting 7.2% inflation in FY2025-26 due to higher food and fuel prices.

For FY2026-27, inflation is now projected at 8.3%, reflecting the continued impact of the ongoing Middle East conflict, which is expected to keep energy costs elevated and sustain inflationary pressures.

According to the report, persistent external uncertainties and expensive energy imports are likely to remain key challenges for Pakistan's economy in the coming fiscal year.

Separately, the ADB lowered its 2026 growth forecast for developing Asia and the Pacific to 4.9%, down from 5.5% recorded in 2025 and 0.2 percentage points below its April projection.

The report attributed the weaker regional outlook to prolonged disruptions in global energy markets stemming from the Middle East conflict.

While a framework agreement reached in June is expected to ease pressures gradually, the bank said the effects on energy, fertilizer, commodity prices and supply chains are likely to persist.

Regional inflation is now projected at 4.3% in 2026, compared with 3.0% in 2025, marking an upward revision of 0.7 percentage points from the April outlook. The 2027 regional growth forecast remains unchanged at 5.1%, while inflation is expected to moderate to 3.4%.

Copyright Mettis Link News