The World Bank has updated its forecast for Pakistan’s GDP growth in the fiscal year 2024-25, raising it to 2.8%, up from the 2.3% projected in June 2024. However, this figure remains lower than the International Monetary Fund’s (IMF) forecast of 3% and the government’s target of 3.6%.
The revised growth outlook, detailed in the World Bank’s World Economic Prospects Report 2025, indicates that while Pakistan is showing signs of economic recovery, its progress lags behind neighboring countries in South Asia. India is projected to lead the region with a 6.7% growth rate, followed by Bhutan at 7.2%, Maldives at 4.7%, Nepal at 5.1%, Bangladesh at 4.1%, and Sri Lanka at 3.5%.
Pakistan’s slight economic recovery is attributed to the government’s stringent fiscal and monetary policies, which have reduced uncertainty since the February 2024 elections. Inflation, which had reached double digits in recent years, has dropped to single digits for the first time since 2021. This decline, coupled with improved foreign exchange reserves, has provided some relief to the economy.
Despite these positive developments, the World Bank warned that Pakistan’s per capita income would remain weak until 2026. The report also highlighted the increasing debt burden in Pakistan and Bangladesh, with interest payments expected to rise further.
Pakistan’s debt-to-GDP ratio is projected to decline gradually, contingent on the government’s adherence to the IMF loan program. The World Bank emphasized the importance of maintaining consistent policies to foster investor confidence and ensure long-term economic stability.
While inflation moderation and rising reserves provide reasons for cautious optimism, experts stress the need for structural reforms and effective external debt management to sustain economic recovery.
