ISLAMABAD: The Asian Development Bank anticipates Pakistan’s economic growth at 3.7 percent in 2026-27. It is below the government’s target of 4 percent economic growth in the current financial year.
The Manila-based lender also projected inflation at 8.3pc, exceeding the official estimate of 7pc for the current fiscal year.
The ADB maintained its July growth forecast after lowering the projection from 4.5pc in its April 2026 outlook.
It said rising energy, logistics and agricultural input costs would continue putting pressure on domestic prices.
ADB also warned that escalating conflict in the Middle East could increase energy import costs and disrupt labour markets in Gulf economies.
Consequently, weaker economic activity in Gulf countries could affect remittances sent by Pakistani workers.
Pakistan faces multiple economic risks
The bank also warned that renewed austerity measures could weaken domestic demand and economic activity.
Additionally, tighter global financing conditions, tax revenue shortfalls and weather-related agricultural shocks could affect Pakistan’s economic outlook.
Delays in energy-sector and state-owned enterprise reforms also pose risks, the ADB said.
The lender stressed that consistent reforms remain essential for strengthening fiscal and external stability while maintaining investor confidence.
Pakistan’s economy grew 3.7pc in FY26, compared with 3.2pc in FY25, supported by manufacturing, services, agriculture and private investment.
Agriculture grew 2.9pc despite flood-related crop losses, while private investment increased 8.6pc amid lower borrowing costs and improved business confidence.
Meanwhile, Pakistan’s sovereign credit ratings received upgrades from S&P and Moody’s in July and August respectively.
The country also regained access to international capital markets through Eurobond and Panda bond issuances earlier this year.
ADB Country Director Emma Fan said maintaining reform momentum would remain critical for stronger private investment and greater resilience to external shocks.
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