ADB Upgrades Pakistan’s Economic Growth Forecast for 2025-26

The Asian Development Bank (ADB) has upgraded Pakistan’s economic growth projections for 2025 and 2026, citing stronger-than-expected fourth-quarter performance, easing inflation, and a milder impact from the June 2025 floods. The move reflects improving economic fundamentals despite lingering uncertainties.

ADB’s latest report, Asian Development Outlook: Growth steadies but uncertainty lingers, notes that Pakistan’s GDP estimate for FY2025 has been raised from 2.7% to 3%. Economic activity in Q4 surged 5.7%, with large-scale manufacturing showing solid momentum as the country heads into FY2026. Inflation has eased to 4.7% in the first four months of FY2026, down from 8.7% the previous year, supported by stabilized food prices.

At the regional level, ADB has also increased growth forecasts for developing Asia and the Pacific to 5.1% in 2025 and 4.6% in 2026, driven by stronger exports, easing trade uncertainty, and stable financial conditions.

“Asia and the Pacific’s solid economic fundamentals are underpinning robust export performance and steady growth, despite a global trade environment clouded by historic levels of uncertainty,” said ADB Chief Economist Albert Park.

Inflation across developing Asia is projected to ease to 1.6% in 2025, aided by lower food prices in India, while Pakistan’s inflation has fallen to 4.7% in the first four months of FY2026, down from 8.7% last year, following post-flood price stabilisation.

While short term indicators show improvement, ADB warned that Pakistan remains exposed to structural risks such as economic water scarcity, financial market volatility, and potential global trade tensions.

ADB’s revisions highlight the resilience of Pakistan’s economy post-floods and provide policymakers with guidance for sustaining growth amid regional and global uncertainties.