Asian Development Bank maintains Pakistan growth forecast at 3.7%

The Asian Development Bank has kept its economic growth forecast for Pakistan at 3.7% for the current fiscal year, below the government’s 4% budget target. The Manila-based lender also projected inflation at 8.3%, exceeding official estimates, citing risks from Middle East tensions and potential government austerity measures.

• ▪ADB maintained its July forecast of 3.7% growth for FY2027, down from an earlier April projection of 4.5%
• ▪Inflation expected to reach 8.3%, above Pakistan’s central bank target range of 5-7%, driven by energy and agricultural input costs
• ▪Middle East escalation could raise energy import costs, intensify inflation, and disrupt remittances from Gulf workers
• ▪Potential reintroduction of austerity by Pakistan’s government risks dampening domestic demand and economic activity
• ▪Additional downside risks include tighter global financing, tax revenue shortfalls, weather shocks, and delays in energy reforms
• ▪FY2026 growth accelerated to 3.7% from 3.2% in FY2025, supported by services, manufacturing recovery, and private investment gains
• ▪Agriculture grew 2.9% despite flood losses; private investment jumped 8.6% on lower borrowing costs and improved business confidence
• ▪Pakistan’s sovereign credit upgraded by S&P in July and Moody’s in August 2026, reflecting stronger macroeconomic stability
• ▪Country regained international capital market access through Eurobond and Panda bond issuances in April-May 2026
• ▪ADB stressed consistent reform implementation as critical to fiscal stability, external resilience, and sustained investor confidence

Source: according to media reports