ISLAMABAD: The Asian Development Bank (ADB) has said that while Pakistan’s economy is showing signs of gradual recovery, significant risks continue to threaten long-term stability.
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In its latest report on Pakistan’s economic outlook, the ADB noted that macroeconomic conditions are improving, but external and internal vulnerabilities remain a concern. The bank projected that Pakistan’s economic growth will reach 3.5 percent in the current fiscal year, with an expected increase to 4.5 percent in the next fiscal year.
The report highlighted that inflation is likely to remain elevated in the coming years. It estimated inflation at 6.4 percent in fiscal year 2026, with a slight rise to 6.5 percent in fiscal year 2027. According to the ADB, global factors such as rising oil and gas prices pose a major risk to Pakistan’s economic stability.
The bank warned that continued geopolitical tensions in the Middle East could further increase inflationary pressures and strain the economy. It stressed that external shocks remain a key challenge for Pakistan, particularly in energy markets.
Despite these concerns, the ADB noted positive signs in key sectors, including construction and industry, which are expected to improve in the coming period. The report also suggested that cautious monetary easing by the State Bank of Pakistan could support growth if inflation remains under control.
The ADB emphasized the importance of ongoing structural reforms and increased private sector investment to strengthen economic resilience. It said such measures are essential for reducing dependency on external financing and improving long-term stability.
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While acknowledging Pakistan’s gradual progress, the report concluded that sustained policy discipline and reform implementation will be critical to managing risks and maintaining economic momentum in the years ahead.