The Asian Development Bank (ADB) has upgraded Pakistan’s GDP growth forecast for 2025 from 2.7% to 3%, citing improved industrial performance and a stronger-than-expected economic rebound.

The new projections were released in the ADB’s latest economic report on Pakistan.

According to the report, Pakistan recorded a 5.7% growth rate in the last quarter of the previous fiscal year, demonstrating significant momentum as major industries accelerated production.

Industrial recovery, investment boost

The ADB highlighted that Pakistan’s economic momentum has remained intact, even in the aftermath of the June 2025 floods, which had raised concerns over potential disruptions. Growth continued due to a surge in private sector credit, stronger consumer spending, and renewed investment activity.

The report states that the increase in production across large-scale industries has been a key contributor to the ongoing recovery.

Positive outlook for FY 2025–26

Looking ahead, the ADB expects strong improvement in the current fiscal year, with the business environment described as increasingly favourable. The report notes that growth in 2025–26 also shows improvement, reflecting confidence in Pakistan’s stabilizing economic conditions.

Despite the optimism, the ADB cautioned that external demand remains weak, and uncertainty in global trade continues to pose risks. Nevertheless, the recovery in industry and investment is helping sustain the upward trend.

Growth supported by domestic drivers

According to the ADB, the uptick in consumption and increased availability of credit have played vital roles in stabilizing the economy. The report emphasizes that the steady recovery in both investment and industrial sectors is central to Pakistan’s improved growth trajectory for 2025.