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ADB Forecasts: Pakistan’s GDP Growth at 2.5%, Inflation Reaches 6%

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In April 10, Pakistan is expected to maintain a growth rate of 2.5% in the fiscal year 2025, with this figure rising to 3% in the following fiscal year 2026. This optimistic forecast from the Asian Development Bank (ADB) attributes the boost largely to an ongoing reform initiative aimed at bolstering private sector investments.

In their recent report called “Asian Development Outlook (ADO) April 2025,” the bank indicated that Pakistan’s economy is demonstrating indications of stabilization and recuperation during FY2025. This positive shift can be attributed to the impact of stringent macroeconomic measures and advancements in economic reform efforts taking effect.

“Pakistan’s actual gross domestic product (GDP) is anticipated to expand by 2.5% in FY2025, maintaining the same growth pace as in FY2024,” the report stated.

Furthermore, Pakistan’s economy is expected to accelerate to a growth rate of 3.0% in fiscal year 2026.

The prospects for economic expansion are bolstered by a steadier overall economic situation, aided by the IMF’s Extended Fund Facility agreement initiated in October 2024. Strict adherence to the economic reform plan is essential for strengthening resilience and fostering sustainable and equitable development.

“Pakistan’s economy has gained momentum due to enhanced macroeconomic stability, thanks to strong reforms in sectors like tax policies and the energy industry,” stated Emma Fan, ADB Country Director for Pakistan.

Continued expansion is anticipated for 2025 with an expected acceleration in 2026. The consistent execution of policy changes will be crucial to support this growth trend and strengthen both financial and external reserves.

The ADB stated that the anticipated growth for fiscal year 2025 will likely stem from an upturn in private-sector investments spurred by advancements in reforms, improved perceptions of economic stability, and a consistent foreign exchange market.

It was indicated that the successful execution of the reform initiative is expected to further stabilize the macroeconomic landscape and progressively eliminate structural impediments to economic expansion.

It was observed that economic activity within both the industrial and service sectors will profit from the recent monetary relaxation and the macroeconomic stability in the nation.

Furthermore, substantial money transfers from abroad, reduced price levels, and relaxed monetary policies are expected to bolster overall demand.

The ADB stated that the forecasted average inflation rate for Pakistan is expected to drop considerably to 6% in FY2025 and then decrease even more to 5.8% in FY2026.

“This is due to ongoing moderation in food price increases, consistent global oil and commodity costs, mild domestic demand conditions, and a positive baseline impact,” the statement read.

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