The World Bank has forecasted Pakistan’s GDP growth at 2.6% for fiscal year 2025-26. This prediction reflects the damaging effects of recent floods on the country’s agriculture sector. In the previous year, Pakistan’s economy grew by 2.7%, a slight increase from 2.5% in 2023-24. However, the floods are expected to cause a major decline in crop production, especially in Punjab.
According to early estimates, Punjab’s agricultural output may drop by at least 10%. Key crops such as rice, wheat, cotton, sugarcane, and maize will be affected. This decrease could raise food prices and inflation in the coming years. Despite this, the World Bank expects growth to improve to 3.4% in 2026-27. The rebound will come from better agricultural output, lower inflation, and increased private investment.
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The report also highlights a five-year tariff reform plan running from 2025 to 2030. This plan aims to reduce Pakistan’s high tariffs by half to encourage export growth. Inflation dropped to single digits in 2024-25 due to easing food and energy prices. Still, supply chain disruptions caused by floods will likely push inflation up until 2027.
Poverty reduction remains a key focus, with a 9.4 percentage point decline recorded from 2011 to 2018. However, recent economic shocks and disasters have slowed progress. Pakistan continues to carry a large portion of the region’s poor population, making poverty alleviation critical.
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Finally, the World Bank notes Pakistan’s high fertility rate compared to neighboring countries. Increasing female labor participation could boost GDP per capita by 20-30%. The broader Middle East, North Africa, Afghanistan, and Pakistan region is expected to grow 2.8% in 2025 and 3.3% in 2026 amid global risks.