The International Monetary Fund (IMF) has forecast that Pakistan’s economic growth rate is likely to remain at 3.6 percent for the fiscal year 2025-26, which is lower than the government’s projected estimate of 4.2 percent.  In its World Economic Outlook Report 2025, the IMF stated that global inflation is expected to remain relatively low; however, economic challenges persist for Pakistan.  The IMF raised Pakistan’s GDP growth estimate for the outgoing fiscal 2024–25 by 0.1 percentage point, bringing it to 2.7%.

This aligns closely with the Finance Division’s estimate, published in its June 2025 Monthly Economic Outlook, which placed real GDP growth for FY25 at 2.68%.  The IMF report for fiscal 2025-26 indicates a potential failure to meet the government’s target of 4.2%.  Government sources suggest that this possible lower growth rate could be due to global and internal economic issues and prevailing uncertainty.  The IMF also revised slightly upward global economic growth to be 3% in 2025 and 3.1% in 2026.

The 2025 forecast is 0.2 percentage points higher than the April 2025 WEO estimate, while the 2026 figure is up by 0.1 percentage point.  According to the report, the average global inflation rate is expected to be around 4.2% in 2025, which could drop to 3.6% in 2026. In particular, inflation in the US is likely to remain higher than expected.  The IMF revised China's 2025 economic growth up to 4.8% in an update to its WEO, from the 4.0% forecast in April. 

The IMF report also highlighted global economic risks, stating that global instability and geopolitical tensions could pose challenges to economies, potentially leading to increases in commodity prices.  Regarding US trade negotiations, the IMF said that if successful, they could lead to improved growth momentum. US President Donald Trump gave a 90-day relaxation in raise in tariff on China which positively influenced the global trade environment.

However, this tariff relief is set to expire on August 1, after which tensions may rise again.  According to Pakistani officials, the government is undertaking various measures for economic growth, but IMF projections and global economic pressures could complicate these efforts. The government will have to deal with both global financial instability and internal economic challenges. 

Credit: Independent News Pakistan (INP)