Asian Development Bank raised Pakistan’s economic growth forecast to 3.5pc for FY2026, citing recovery in manufacturing and investment. The upgrade matters as stabilisation supports jobs, incomes, and investor confidence nationwide. However, risks remain high due to global uncertainty and Middle East tensions affecting prices and trade.
The Manila-based lender said growth could reach 4.5pc in FY2027 as reforms advance and private investment rebounds. Manufacturing, services, and construction are expected to drive momentum amid monetary easing. Still, the bank warned of downside risks from inflation, fiscal pressures, and external shocks.
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Emma Fan said recent reforms have strengthened momentum despite a challenging global environment. She stressed sustained reforms are essential to protect gains and rebuild buffers. Without discipline, policy slippage could revive balance-of-payments pressures.
Inflation is projected to rise to 6.4pc in FY2026 and 6.5pc in FY2027 due to higher energy prices. Oil and gas imports leave Pakistan exposed to Middle East disruptions. Consequently, the central bank is expected to ease policy cautiously within its target range.
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Meanwhile, investment and consumption should recover as inflation eases and financing improves. Privatisation, including Pakistan International Airlines, is expected to attract capital. Remittances remain resilient, but prolonged conflict could widen deficits and slow growth.