ISLAMABAD: S&P Global Market Intelligence has projected an improving macroeconomic outlook for Pakistan in the current and next fiscal years, broadly endorsing the State Bank of Pakistan’s (SBP) latest projections.
The research firm said real GDP will expand by 3.5 percent in FY26 and then accelerate to 4.4 percent in FY27. It shared the assessment in its commentary on the SBP’s recent monetary policy decision to keep the benchmark interest rate unchanged at 10.5 percent.
Moreover, these projections closely match the SBP’s own forecast of 3.75 to 4.75 percent growth for FY26. The central bank attributed the expected expansion to stronger momentum in commodity-producing sectors and positive spillover effects into services. It also noted that earlier monetary easing and continued macroeconomic stability should support growth into FY27.
However, international assessments differ slightly. The International Monetary Fund recently projected Pakistan’s growth at 3.2 percent, which is lower than its earlier estimate of 3.6 percent and below the SBP and S&P expectations.
External Accounts and Inflation Outlook Remain Cautiously Positive
On the external front, the SBP projected the current account deficit to stay within 0 to 1 percent of GDP in FY26. It further expects foreign exchange reserves to exceed $18 billion by end-June 2026, supported by steady remittances and planned official inflows. The central bank added that reserves could approach the benchmark of three months of import cover in FY27.
Meanwhile, S&P Global Market Intelligence forecast a current account deficit of 0.5 percent of GDP in 2026 and 1.3 percent in 2027. Nevertheless, it warned that risks remain tilted to the downside due to global tariff uncertainty, volatile commodity prices, and geopolitical fragmentation.
On inflation, the SBP expects price pressures to stabilize within its 5 to 7 percent target range over the next two years. S&P projected inflation at 5.1 percent in 2026 and 5.6 percent in 2027.
However, it cautioned that upside risks persist, linked to commodity volatility, domestic wheat prices, possible energy tariff adjustments, and stronger domestic demand.
