The Asian Development Bank (ADB) has lowered Pakistan’s FY2027 economic growth forecast to 3.7 percent while raising inflation projections for FY2026 and FY2027. The revised outlook reflects higher energy costs, pressure on workers’ remittances, and risks linked to the Middle East conflict. Businesses, consumers, and policymakers could face greater economic challenges as inflationary pressures persist.
In its Asian Development Outlook July 2026, the ADB said Pakistan’s economy expanded by 3.7 percent in FY2026. The growth was driven by stronger industrial and services activity alongside modest agricultural gains. However, the bank expects economic momentum to remain subdued during FY2027 because of rising energy costs and weaker remittance inflows.
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Meanwhile, the ADB raised Pakistan’s FY2026 inflation forecast to 7.2 percent, citing higher food and fuel prices. It also increased the FY2027 inflation projection to 8.3 percent. According to the report, continued spillover effects from the Middle East conflict could keep inflation elevated and increase uncertainty for the economy.
The revised outlook highlights the external challenges facing Pakistan despite signs of economic recovery. Higher import costs, global geopolitical tensions, and softer remittance growth could limit business activity and household spending. Economists say maintaining macroeconomic stability will remain a key priority for the government.
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The ADB noted that Pakistan’s recovery continues, but significant risks remain over the medium term. It stressed the importance of prudent economic management to contain inflation and support sustainable growth. The latest projections provide an updated assessment of Pakistan’s economic outlook amid an uncertain global environment.