The Asian Development Bank (ADB) has updated Pakistan’s economic outlook, forecasting a 3% GDP growth for fiscal year 2025, up from the previous estimate of 2.8%. The bank also revised its inflation forecast for FY2025 downward to 10%, a significant reduction from the 15% forecast for FY2024.
In its latest “Asian Development Outlook” report, ADB also adjusted its growth projection for fiscal year 2024, raising it to 2.5%, in line with updated official estimates.
The ADB attributed the improved inflation outlook to a faster-than-expected easing of inflationary pressures, including a decline in the Consumer Price Index (CPI) inflation to single digits in August. This was due to factors such as high base effects, reduced demand-side pressures, better food supplies, and favorable global commodity prices, along with delays in energy price hikes.
The report highlighted that greater macroeconomic stability, following Pakistan’s approval of a new IMF programme under the Extended Fund Facility in September, would support recovery. Industrial output is expected to grow as import restrictions are lifted, investor confidence rises, and access to foreign exchange improves.
However, the ADB noted that agriculture growth is likely to slow due to the impact of severe monsoon rains and floods in parts of the country, which have negatively affected key crops like wheat and cotton.
While Pakistan and Sri Lanka’s growth forecasts have been revised upwards, the growth outlook for Bangladesh and the Maldives has been downgraded, reflecting ongoing challenges from political unrest in Bangladesh and fiscal tightening in the Maldives. Growth in Nepal is also expected to be weaker in 2025 than previously predicted.
