Pakistan’s economic growth is expected to remain stable at 2.5% in fiscal year 2025, with an increase to 3% in FY2026, according to the Asian Development Bank (ADB). This growth trajectory is supported by ongoing reforms aimed at boosting private investment and strengthening the country’s economic foundation, as outlined in the ADB’s latest report, Asian Development Outlook (ADO) April 2025.
The ADB report highlights that Pakistan’s economy is showing signs of stability and recovery, largely due to the implementation of tight macroeconomic policies and progress in essential reforms. “Pakistan’s real GDP is projected to grow by 2.5% in FY2025, the same as FY2024,” the report states, with a more optimistic forecast for FY2026, expecting growth to rise to 3.0%.
The forecast is further bolstered by the IMF Extended Fund Facility (EFF) arrangement, which began in October 2024. The ADB notes that adhering to the economic adjustment program will be crucial in building long-term resilience and enabling sustainable growth for Pakistan.
Emma Fan, ADB’s Country Director for Pakistan, emphasized that Pakistan’s economy has benefitted from improved macroeconomic stability due to effective reforms in areas like tax policy and the energy sector. “Sustained reform implementation will be key to continuing this positive growth trend and reinforcing fiscal and external resilience,” she added.
Looking ahead, the growth in FY2025 is expected to be driven by a rebound in private-sector investment, stemming from progress on reforms, increased economic stability, and a stable foreign exchange market. The ADB predicts that the successful continuation of these reforms will gradually remove structural barriers, fostering further economic growth.
Additionally, the industrial and service sectors are likely to benefit from recent monetary easing and continued macroeconomic stability. Strong remittance inflows, lower inflation, and improved monetary conditions are expected to further support economic demand.
Inflation, which has been a concern for Pakistan in recent years, is projected to decrease significantly. ADB forecasts average inflation to drop to 6% in FY2025, and further to 5.8% in FY2026, driven by moderating food prices, stable global oil and commodity prices, and favorable domestic demand conditions. This decline in inflation is a positive sign for Pakistan’s economic stability, as it would help improve purchasing power and enhance overall economic conditions.
