ADB projects Pakistan’s economic growth at 3.7pc in FY2027

The Asian Development Bank has projected Pakistan economic growth at 3.7% for the current fiscal year, below the government’s objective of 4%.
The bank is also expecting average inflation of 8.3%, higher than the official forecast of 7%, due to probable economic disruptions from the ongoing turmoil in the Middle East.

In its Asian Development projection September 2026 projection, it noted Pakistan’s gross domestic product growth was projected to stay at 3.7pc in FY2027.

“As high energy, logistics, and agricultural input costs continue to affect domestic prices, average inflation is projected to rise to 8.3pc in FY27, above the central bank’s medium-term target range of 5pc–7pc,” it continued.

The ADB warned that Pakistan’s economic outlook could come under significant pressure from external developments. A rising Middle East conflict could add to the cost of oil imports, worsen the price hikes and employment conditions in the Gulf countries, which could cut remittance inflows by Pakistani workers.

The ADB said, “The re-imposition of austerity measures by the Pakistan government, especially if expenditure restraint is more pronounced than anticipated, could also weigh on domestic demand and economic activity and pose an additional downside risk to the economic outlook.

Other possible risks to the economy cited by the ADB are a tighter global financial environment, lower-than-expected tax revenue, climate and weather shocks to agriculture, and delays in reforms related to the energy sector and state-owned enterprises.

It is crucial to keep up the momentum on structural changes to improve the country’s fiscal and external position while helping to maintain confidence among investors, the bank added.

Economic activity in Pakistan improved during FY26 which ended June 30, 2026. Growth was 3.7% compared to 3.2% a year ago. A recovery was seen in a number of areas with strong services, rising industrial production, a resurgence in agriculture and strengthening private sector investment. However, economic activity slowed down a little in the last quarter, reflecting the effect of the Middle East crisis.

Continued reforms, better foreign-exchange reserves, renewed access to global capital markets and improvements in Pakistan’s sovereign credit ratings might assist raise investor confidence and stimulate private investment, the ADB said. Meanwhile, persistently high energy costs and uncertainties in the external environment, notably the ongoing impact of the Middle East conflict, could impede the speed of economic expansion.