The Asian Development Bank (ADB) has released its Asian Development Outlook for July 2026. The report delivers tough news for Pakistan. The ADB has revised Pakistan’s economic growth outlook for FY2027 down to 3.7%. Furthermore, the bank sharply raised its inflation projections. Rising food costs, expensive fuel, and global conflicts continue to drive this economic strain.
Preliminary data show that Pakistan’s economy expanded by 3.7% in FY2026. Strong industrial performance drove this growth. The services sector also helped, while agriculture made modest gains.
However, this momentum will likely hit a wall. The ADB expects the FY2027 growth outlook to remain stuck at 3.7%. Elevated energy costs are weighing heavily on economic activity. Additionally, workers’ remittances face mounting pressure and show signs of weakening. Therefore, overall economic growth remains severely constrained.
Price pressures are steadily worsening. The ADB revised Pakistan’s FY2026 inflation forecast upward to 7.2%. Rising food and fuel prices directly caused this spike.
Moving forward, the situation looks even tougher. The bank increased the FY2027 inflation forecast to a sharp 8.3%. The ongoing Middle East conflict presents persistent adverse spillovers. Consequently, these global risks will likely keep local price pressures highly elevated.
These latest projections highlight the severe challenges facing Pakistan’s economy. The country is experiencing an ongoing economic recovery. Yet, external risks remain a massive threat. Inflationary pressures will continue acting as key concerns over the medium term.
