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The World Bank has projected Pakistan’s GDP growth at 2.6% for FY2025-26, citing ongoing catastrophic floods and renewed inflationary pressures as key challenges weighing on the economy. The forecast was shared in the World Bank’s latest Middle East, North Africa, Afghanistan & Pakistan (MENAAP) economic report released on Tuesday.
According to the report, Pakistan’s real GDP at factor cost grew by 2.7% in FY2024-25, slightly higher than the 2.5% recorded in the previous fiscal year. However, the World Bank projects GDP growth to moderate to around 2.6% in FY2025-26, as widespread floods continue to disrupt the agricultural sector and limit overall economic recovery.
Early estimates indicate that Punjab’s agricultural output could drop by at least 10%, affecting major crops including rice, sugarcane, cotton, wheat, and maize.
Pakistan’s Economic Growth to Rebound Gradually by FY2026-27
Looking ahead, the World Bank forecasts a gradual improvement, with Pakistan’s GDP growth expected to accelerate to 3.4% in FY2026-27. The rebound is likely to be supported by better agricultural performance, easing inflation and interest rates, and stronger consumer and business confidence.
The report also highlights Pakistan’s recent approval of a five-year National Tariff Reform Plan (2025–2030), aimed at cutting tariffs by half to boost exports and long-term growth.
Inflation, which had dropped to single digits in FY2024-25 due to lower food and energy prices, is expected to rise again through 2027 as floods continue to disrupt food supply chains.
On poverty trends, the World Bank noted that Pakistan’s poverty rate had declined between 2011 and 2018. However, recurring economic shocks and natural disasters since 2020 have likely stalled this progress.
