Flags recovery but warns inflation may rise to 6.5% by FY2027 amid global uncertainty, Middle East tensions
\n Islamabad
\nPakistan\u2019s economy is expected to grow by 3.5% in fiscal year 2026 and 4.5% in FY2027, as a recovery in manufacturing and rising investment sustain momentum following stabilisation in FY2025, the Asian Development Bank said on Friday.
\nIn its Asian Development Outlook, April 2026, the bank said economic growth had already strengthened to 3.1% in FY2025, supported by tight macroeconomic policies and progress on reforms.
\n\u201cPakistan\u2019s economy has stabilised and begun to show stronger momentum, supported by progress in implementing key economic reforms amid a challenging global environment,\u201d said ADB Country Director Emma Fan.
\n\u201cGrowth is expected to continue in 2026 and 2027, but downside risks are significant. Sustained reform efforts are critical to preserve the growth momentum and bolster fiscal and external buffers against global shocks.\u201d
\nThe report warned, however, that inflation is projected to rise to 6.4% in FY2026 and 6.5% in FY2027, driven by higher global oil prices and trade disruptions linked to tensions in the Middle East. Oil and gas imports form a significant portion of Pakistan\u2019s import bill, making the economy vulnerable to external shocks.
\nA prolonged Middle East conflict could further strain the outlook by increasing energy and fertiliser costs, weakening agricultural and industrial output, reducing remittances and widening the current account deficit, it noted.
\nThe ADB said growth in FY2026 would be supported by a rebound in private-sector investment, aided by reform progress and a stable foreign exchange market.
\nEconomic activity in industry and services is also expected to benefit from cautious monetary easing, while construction will be supported by fiscal incentives in the FY2026 budget and post-flood reconstruction efforts.
\nDespite recent gains, the bank cautioned that Pakistan\u2019s economic outlook remains exposed to global uncertainty, with risks of renewed inflationary, fiscal and external pressures. It stressed that prudent macroeconomic management and sustained structural reforms would be key to ensuring durable and inclusive growth.<\/p>\n","protected":false},"excerpt":{"rendered":"
Flags recovery but warns inflation may rise to 6.5% by FY2027 amid global uncertainty, Middle East tensions Islamabad Pakistan\u2019s economy is expected to grow by 3.5% in fiscal year 2026 and 4.5% in FY2027, as a recovery in manufacturing and rising investment sustain momentum following stabilisation in FY2025, the Asian Development Bank said on Friday. […]<\/p>\n","protected":false},"author":2,"featured_media":534934,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-541209","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n