ISLAMABAD: Pakistan’s economy is showing signs of stabilization, with the World Bank projecting a growth rate of 2.7 percent for the current fiscal year, up from 2.5 percent in the previous year. This forecast is detailed in the World Bank’s latest Pakistan Development Update.

The report attributes this growth to a recovery in private consumption and investment, spurred by subdued inflation, lower interest rates, and an improvement in business confidence. These factors are collectively contributing to the real GDP growth in the country.

The World Bank highlights that the Pakistani economy is stabilizing, with signs of easing inflation, better financial conditions, and surpluses in both the current account and primary fiscal balance. However, the report stresses the need for structural reforms to harness private capital, particularly in advancing Pakistan’s digital infrastructure and creating a supportive environment for the digital economy.

The Pakistan Development Update serves as a companion to the South Asia Development Update, a biannual World Bank report that assesses economic trends and policy challenges across the region.

Najy Benhassine, the World Bank’s Country Director for Pakistan, noted that the key challenge for Pakistan is to convert these stabilization gains into sustainable economic growth that effectively reduces poverty.