Pakistan’s economy is forecasted to show minimal growth, hovering around 3%, due to ongoing structural weaknesses and climate-related challenges, as per the World Bank’s latest Global Economic Prospects report. The report indicates that Pakistan’s economy expanded by 3.0% in FY2024-25 and is anticipated to maintain this growth rate in FY2025-26, with a slight increase to 3.4% in FY2026-27. The recent growth was primarily driven by increased industrial activity following the easing of import restrictions and an uptick in bank credit.
Despite the positive industrial performance, the agricultural sector faced setbacks, with farm output being adversely affected, partly due to floods in 2025. Pakistan, situated in the Middle East, North Africa, Afghanistan, and Pakistan region, is expected to witness overall growth improvement, although the economic prospects vary significantly among different countries. Pakistan’s economic outlook remains constrained by structural issues, climate risks, and fiscal challenges.
The World Bank anticipates a gradual recovery in agriculture and reconstruction efforts post the previous year’s floods to offer some support in the future. However, the growth rate remains insufficient to significantly boost incomes or accommodate population expansion. The report also highlights that public debt levels in emerging and developing economies are at a record high, limiting governments’ capacity to stimulate growth.
M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist, emphasized the urgency of restoring fiscal credibility, especially with public debt levels soaring. Kose suggested that implementing fiscal rules could aid in debt stabilization and buffer rebuilding, but success hinges on factors like credibility, enforcement, and political dedication. Pakistan has encountered various economic challenges in recent times, including floods, balance-of-payments pressures, and policy uncertainties, which have impeded investment and economic progress.
