Islamabad: Pakistan’s economy is on the path to recovery, with the Asian Development Bank (ADB) projecting a 2.5% growth in the fiscal year 2025, according to its April 2025 Asian Development Outlook. The anticipated growth is attributed to the implementation of reforms and macroeconomic policies, which have begun to stabilize the country’s economic landscape.
The ADB’s forecast indicates that Pakistan’s real GDP is expected to maintain the 2.5% growth rate seen in the previous fiscal year, with a potential increase to 3.0% in FY2026. This positive outlook is supported by a more stable macroeconomic position, strengthened by the International Monetary Fund’s Extended Fund Facility arrangement initiated in October 2024.
Emma Fan, ADB’s Country Director for Pakistan, highlighted the benefits of improved macroeconomic stability due to robust reforms in tax policy and energy sector viability. She emphasized the importance of continued policy reform implementation to sustain and enhance economic growth.
The forecasted growth for FY2025 is expected to be driven by increased private sector investment, bolstered by perceptions of greater economic stability and a stable foreign exchange market. This environment is anticipated to support economic activity in both the industrial and service sectors, aided by recent monetary easing.
Inflation rates are projected to decrease significantly, with average inflation expected to fall to 6.0% in FY2025 and 5.8% in FY2026. This decline is attributed to reduced food inflation, stable global oil prices, and moderate domestic demand conditions.
The ADB also pointed out the potential economic benefits of increasing female labor force participation in Pakistan. Enhancing female empowerment through education, vocational training, and improved public transport options could boost productivity and economic output.
While the growth forecasts do not account for new tariffs announced by the US administration on April 2, the ADB’s publication includes an analysis of potential impacts from higher tariffs on growth in Asia and the Pacific.
The ADB’s projections underscore the critical role of policy reforms in building economic resilience and promoting sustainable growth in Pakistan.