The International Monetary Fund (IMF) has kept Pakistan's economic growth forecast unchanged, projecting GDP growth of 3.5% for the current fiscal year 2026-27 -- below the government's 4% target.
In its latest World Economic Outlook, the IMF also warned that inflation is expected to rise globally, including in Pakistan, as geopolitical tensions and supply chain risks continue to weigh on the global economy.
The International Monetary Fund has released its latest World Economic Outlook (WEO) report, maintaining its forecast for Pakistan's economy despite ongoing global uncertainties.
According to the report, Pakistan's economy is expected to grow by 3.5% during fiscal year 2026-27, the same projection the IMF issued in April. The forecast remains below the 4% GDP growth target set by the federal government for the current fiscal year.
The IMF's unchanged outlook suggests that while Pakistan's economy continues to recover, growth is likely to remain slower than the government's expectations.
Pakistan missed growth target
The report also highlighted that Pakistan fell short of its economic growth target in the previous fiscal year.
According to the IMF, the country's economy expanded by 3.6%, compared with the government's target of 4.2%, marking another year in which actual growth remained below official expectations.
With the IMF once again forecasting 3.5% growth for the current fiscal year, Pakistan is expected to miss its economic target for a second consecutive year unless growth accelerates significantly.
Inflation will rise in Pakistan and globally
Alongside its growth projections, the IMF warned that inflation is likely to increase worldwide in 2026, with Pakistan also expected to experience higher consumer prices.
The report projects Pakistan's average inflation rate at 8.4% during the current fiscal year, indicating continued pressure on households and businesses despite earlier signs of price stability.
The IMF noted that inflationary pressures are not limited to Pakistan, as several global factors continue to threaten price stability across economies.
Middle East conflict and supply chain risks
The IMF warned that the ongoing war in the Middle East poses significant risks to the global economy.
According to the report, the conflict could trigger fluctuations in oil prices and other commodity prices, increasing uncertainty for importing countries and adding pressure to inflation.
The IMF also cautioned that the risk of global supply chain disruptions remains, which could further affect trade, production costs and economic growth across the world.
On the global front, the IMF expects the world economy to grow by 3% in 2026.
The report forecasts a modest improvement in the following year, with global economic growth projected to rise to 3.4% in 2027, reflecting a gradual strengthening of economic activity despite ongoing geopolitical and economic challenges.
AI and technology offer optimism
Despite highlighting several risks, the IMF also pointed to emerging opportunities for global growth.
According to the report, artificial intelligence (AI) is supporting the global economy by improving productivity and creating new opportunities across industries.
The IMF added that advances in technology are expected to benefit many countries, helping boost long-term economic performance and innovation.
IMF urges govts to accelerate reforms
In light of persistent global risks and domestic economic challenges, the IMF called on governments to speed up economic reforms.
The report emphasized that stronger structural reforms will be essential to improving economic resilience, managing inflation, supporting sustainable growth and preparing economies for future global shocks.
With Pakistan facing slower-than-targeted growth and higher inflation expectations, the IMF's latest outlook underscores the importance of continued policy reforms while navigating an uncertain global economic environment.
