ADB Lowers Pakistan FY2027 Growth Forecast to 3.7%

The Asian Development Bank (ADB) has lowered Pakistan\’s FY2027 economic growth forecast to 3.7 percent. Meanwhile, the bank raised inflation projections for FY2026 and FY2027. Higher energy costs drive this revised outlook. Pressure on workers\’ remittances adds to the challenge. Risks linked to the Middle East conflict also weigh on the economy. Businesses, consumers, and policymakers could face greater economic challenges. Inflationary pressures persist across key sectors.

FY2026 Growth and FY2027 Outlook

In its Asian Development Outlook July 2026, the ADB said Pakistan\’s economy expanded by 3.7 percent in FY2026. Stronger industrial and services activity drove this growth. Modest agricultural gains also contributed. However, the bank expects economic momentum to remain subdued during FY2027. Rising energy costs create headwinds. Weaker remittance inflows add further pressure.

Read more: ADB unveils Pakistan strategy for 2026-2030

Inflation Forecasts Revised Upward

Meanwhile, the ADB raised Pakistan\’s FY2026 inflation forecast to 7.2 percent. Higher food and fuel prices drive this increase. The bank also increased the FY2027 inflation projection to 8.3 percent. Continued spillover effects from the Middle East conflict could keep inflation elevated. Uncertainty for the economy increases as a result.

External Challenges Persist Despite Recovery

The revised outlook highlights external challenges facing Pakistan. Signs of economic recovery exist. However, higher import costs create difficulties. Global geopolitical tensions add complexity. Softer remittance growth could limit business activity. Household spending may also decline. Economists say maintaining macroeconomic stability remains a key priority for the government.

Read more: Pakistan, ADB sign $700 million loan deal for insurance sector reforms

Prudent Management Needed for Sustainable Growth

The ADB noted that Pakistan\’s recovery continues. Significant risks remain over the medium term. The bank stressed the importance of prudent economic management. Containing inflation requires focused policy action. Supporting sustainable growth remains essential. The latest projections provide an updated assessment of Pakistan\’s economic outlook. An uncertain global environment complicates planning.