The Asian Development Bank (ADB) has revised its economic forecast for Pakistan, projecting a 3% GDP growth for fiscal year 2025, up from the earlier estimate of 2.8%. The bank also adjusted its inflation forecast for the same period, reducing it to 10% from the 15% predicted for fiscal year 2024.
In its latest “Asian Development Outlook” report, the ADB updated its growth forecast for fiscal year 2024, increasing it to 2.5%, which aligns with the revised official estimates. This improvement comes as a result of a quicker-than-expected reduction in inflationary pressures. Consumer Price Index (CPI) inflation dropped to single digits in August, driven by several factors, including higher base effects, subdued demand, improved food supply, favorable global commodity prices, and delayed energy price hikes.
The ADB also noted that macroeconomic stability, supported by the new International Monetary Fund (IMF) programme under the Extended Fund Facility, is expected to help Pakistan’s recovery. With the suspension of import restrictions, increased investor confidence, and improved access to foreign exchange, industrial output is projected to accelerate.
However, the outlook for agriculture remains less optimistic. Growth in the sector is expected to be weaker due to the heavy monsoon rains and floods in parts of the country between July and September 2024, which have negatively affected crops like wheat and cotton.
While the growth outlook for Pakistan and Sri Lanka has improved due to their recovery from previous economic challenges, the forecasts for Bangladesh and the Maldives have been downgraded. This is due to ongoing political instability in Bangladesh and fiscal tightening in the Maldives. Growth in Nepal is also expected to weaken in 2025 compared to earlier forecasts.
