The International Monetary Fund has lowered economic growth estimate for Pakistan during the current financial year, below the government’s projection.
The Fund has projected Pakistan’s economic growth rate at 3.6% for 2025-26, falling short of the government’s target of 4.2%, according to its latest World Economic Outlook Update, released today.
While the IMF expects Pakistan’s growth to outpace the anticipated global average of 3% in 2025 and 3.1% in 2026, the pace remains insufficient to meet the country’s domestic expectations and development goals.
The global lender attributed the slower growth forecast to a combination of internal and external challenges. It noted that despite easing global inflation and gradually improving financial conditions, geopolitical tensions, potential tariff hikes, and growing policy uncertainty continue to pose risks to global economic growth.
“These factors could negatively impact emerging markets such as Pakistan,” the report cautioned, emphasizing the need to restore investor confidence and create favorable financial and policy conditions.
The outlook comes as Pakistan implements economic reforms under the IMF-supported programme. Although indicators such as inflation and the current account deficit show signs of improvement, the Fund warned that growth remains fragile and susceptible to external shocks.
The report also highlighted that geopolitical risks—particularly conflicts in Europe and the Middle East—threaten global economic stability and supply chains.
“Despite global headwinds, Pakistan’s growth projection still outpaces that of the broader global economy,” the IMF observed, suggesting a relative improvement compared to previous years.
The Fund urged governments in emerging markets to prioritize policies that rebuild fiscal buffers, ensure financial resilience, and support inclusive growth in an increasingly uncertain global environment.
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