ISLAMABAD: Pakistan’s economy is set to grow by 2.5% in the fiscal year 2025, according to the Asian Development Bank’s latest forecast, as the country implements significant economic reforms and stabilizes its macroeconomic environment.
The Asian Development Outlook report released by the bank highlights that Pakistan’s real GDP is anticipated to maintain a growth rate of 2.5% in FY2025, mirroring the previous fiscal year’s performance. A further increase to 3.0% is projected for FY2026, facilitated by adherence to the IMF Extended Fund Facility arrangement that began in October 2024.
Emma Fan, ADB’s Country Director for Pakistan, noted that robust reforms in tax policy and energy sector viability have contributed to macroeconomic stability. She emphasized the importance of sustained policy reform implementation to bolster fiscal resilience and support a sustainable growth trajectory.
The forecast suggests that private sector investment will play a crucial role in FY2025, driven by reform progress and perceived economic stability. The reform program’s success is expected to create a more stable macroeconomic climate and address structural growth barriers. Industrial and service sectors are poised to benefit from recent monetary easing and stable macroeconomic conditions.
Inflation is projected to decline significantly, with an average of 6.0% expected in FY2025, decreasing to 5.8% in FY2026. Factors contributing to this decline include moderated food inflation, stable global oil prices, and moderate domestic demand.
Female labor force participation remains a challenge, with potential productivity gains if more women enter the workforce. Investing in education and vocational training for women, alongside improved public transport, could help remove barriers to female labor market entry.
The ADB’s growth forecasts were finalized before the announcement of new US tariffs on April 2, so the projections do not account for these changes. However, the report includes an analysis of potential impacts of higher tariffs on growth in the region.
As a leading multilateral development bank, ADB continues to support sustainable growth across Asia and the Pacific, utilizing innovative financial tools and partnerships to address complex regional challenges. Founded in 1966, ADB consists of 69 member countries, with 49 from the region.