Global lenders flag slow growth, persistent risks to Pakistan economy

Reports by the World Bank and the Asian Development Bank said that Pakistan’s economy is advancing at a slow pace, though signs of improvement remain. Inflation and external pressures have been identified as major risks.

According to the latest assessments, gradual improvement in the economy is visible; however, external pressures and inflation continue to pose serious challenges. The World Bank noted that rising oil and gas prices, driven by tensions in the Middle East, have increased economic strain on Pakistan and several other countries. Economic growth for the current fiscal year is expected to fall short of the 4.2 per cent target, likely settling at around 3 per cent.

The report said that inflation could rise to 7.4 per cent in 2026. It also warned that the current account surplus may revert to a deficit, projected to reach 1.2 per cent of GDP. Declining remittances from Gulf countries and weakness in the stock market were also cited among the risks.

Meanwhile, the Asian Development Bank observed that the trend of improvement in Pakistan’s economy persists. Growth is expected to reach 3.5 per cent in the current fiscal year and 4.5 per cent in the next. It added that inflation may remain between 6 and 6.5 per cent, but tensions in the Middle East, high energy costs, weak remittances and external shocks could threaten stability.