Islamabad, April 9, 2025 – The Asian Development Bank (ADB) has projected Pakistan Gross Domestic Product (GDP) growth at 2.5% for the fiscal year 2025, attributing the forecast to ongoing tight macroeconomic policies.
This projection, outlined in the Asian Development Outlook (ADO) April 2025, mirrors the growth rate of FY2024. However, ADB anticipates that Pakistan’s growth will slightly accelerate to 3.0% in FY2026, supported by a more stable macroeconomic environment.
According to ADB, Pakistan’s economic stability is being strengthened by the implementation of the IMF-backed Extended Fund Facility, which started in October 2024. The adjustment program associated with this arrangement is seen as critical for building resilience and ensuring sustainable and inclusive growth for Pakistan in the long term.
“Pakistan has made progress through robust reforms in key sectors such as tax policy and energy sector viability,” said Emma Fan, ADB’s Country Director for Pakistan. “These reforms have contributed to improved macroeconomic stability, and with continued policy implementation, we expect Pakistan’s growth to remain steady in FY2025, with an uptick in FY2026.”
The projected growth in FY2025 is expected to be driven by a rebound in private sector investment. This rebound will be spurred by the successful execution of reforms, which will enhance perceptions of economic stability, alongside a stable foreign exchange market. Furthermore, monetary easing and a more stable macroeconomic position will provide support for industrial and service sector activities.
Stronger remittance inflows, along with lower inflation, are also expected to help sustain aggregate demand across Pakistan. The inflation rate is anticipated to decline significantly to 6.0% in FY2025, and further to 5.8% in FY2026, driven by lower food inflation, stable global commodity prices, and moderate domestic demand conditions.
Despite these positive projections, ADB continues to emphasize the importance of reforms to foster long-term economic growth in Pakistan. The country faces challenges such as low female labor force participation, which limits potential productivity. ADB suggests that empowering more women to enter the workforce could significantly contribute to economic growth, calling for enhanced education, vocational training, and improved public transport infrastructure to break down existing barriers.
While the growth projections were finalized before the US administration’s new tariff announcement on April 2, ADB’s report includes an analysis of how these tariffs could affect growth in Asia and the Pacific.
ADB remains a leading development partner in Pakistan, supporting efforts to build resilient and inclusive economic growth while addressing complex challenges through strategic collaborations and innovative financial solutions.