Pakistan’s economic growth is anticipated to decelerate in the current fiscal year due to increased energy expenses and pressure on foreign remittances, as per the Asian Development Bank’s latest outlook. The bank has revised down Pakistan’s GDP growth forecast for FY27 to 3.7%, a decrease from the earlier projection of 4.5% in April, according to the Asian Development Outlook (ADO).
The Asian Development Bank has cautioned that the growth prospects for the ongoing fiscal year have weakened, primarily due to escalating energy costs and expected challenges in remittance inflows from overseas Pakistanis. This revised forecast falls below the Pakistan government’s growth target of 4% for the fiscal year but slightly exceeds the International Monetary Fund’s projection of 3.5%.
Additionally, the ADB has raised its inflation estimates for Pakistan, attributing this increase to the surge in food and fuel prices, along with persistent spillover effects from the ongoing conflict in West Asia. The inflation rate is now expected to reach 7.2%, up from the 6.4% forecast in April, while the outlook for FY27 has been adjusted upward to 8.3% from 7.2%, according to the report.
Pakistan, along with several other economies, is grappling with slower growth and heightened inflation levels, influenced by prolonged disruptions in global energy markets that continue to impact economic activities. The Asian Development Bank has reduced its 2026 growth forecast for developing Asia and the Pacific to 4.9% from 5.5% in 2025, with a slight adjustment of 0.2 percentage points from the April projection. However, it has maintained the regional growth forecast for 2027 at 5.1%, anticipating a gradual recovery as pressures in the energy market ease.
The report highlights that the downward revisions for South Asia are primarily driven by weaker outlooks for countries like Bangladesh, Pakistan, and Sri Lanka.
