ISLAMABAD: The International Monetary Fund (IMF) has revised its GDP growth forecast for Pakistan, lowering the projection for fiscal year 2025 to 2.6 percent — a 0.4 percent drop from its earlier estimate of 3 percent published in January 2025.
This downward revision is part of the IMF’s latest “World Economic Outlook” (WEO) report titled “A Critical Juncture Amid Policy Shifts”, which reflects growing economic uncertainties and shifting global policy landscapes.
The report indicates that Pakistan’s economic growth is expected to pick up slightly in 2026, reaching 3.6 percent. However, the IMF’s adjustment underscores concerns about the pace and sustainability of economic recovery in the country. This marks the fifth time in the past two years that the IMF has revised its growth projections for Pakistan, largely due to a mix of domestic challenges and evolving global dynamics.
The Fund has also adjusted inflation expectations for Pakistan, forecasting a significant drop to 5.1 percent for the current fiscal year and 7.7 percent for 2026. This comes as a notable improvement from the staggering 23.4 percent inflation rate recorded in fiscal year 2024. According to the IMF, the easing inflationary trend could offer some relief to consumers, but economic momentum remains weak.
On the labor front, the unemployment rate in Pakistan is projected to decline marginally to 8 percent in 2025, down from 8.3 percent in 2024. A further drop to 7.5 percent is anticipated by 2026, signaling a slow but positive trend in job creation.
Meanwhile, Pakistan’s current account balance is forecast to improve slightly, with a deficit of 0.1 percent of GDP expected in 2025 compared to 0.5 percent in 2024. However, a mild increase in the deficit to 0.4 percent is projected for 2026. The IMF also expects the country’s general government net lending/borrowing to stand at negative 5.6 percent of GDP in 2025, an improvement from negative 6.8 percent in 2024.
The Asian Development Bank (ADB) has similarly downgraded Pakistan’s growth forecast to 2.5 percent for 2025, citing the country’s dependence on the success of ongoing economic reforms. These forecasts were reportedly finalized before the April 2 announcement of new tariffs by the US, suggesting they may not fully capture the latest geopolitical shifts.
The IMF cautions that escalating global trade tensions and declining cooperation among major economies are likely to weigh on growth. For Pakistan, navigating this uncertain terrain will require prudent policy-making and successful implementation of IMF-backed reforms to stabilize and revive its economy.