Pakistan is expected to experience “moderate growth, stabilizing after a period of economic contraction”, with its Gross Domestic Product (GDP) projected to expand by 2.3 per cent in 2025, according to a major UN report. United Nations has launched an updated outlook for global economy in the wake of trade tensions that has sent shockwaves through the global economy. 

The report, titled ‘the UN World Economic Situation and Prospects 2025’, noted that declining inflation has allowed most of the South Asian region’s central banks to commence or continue monetary easing in 2025. Meanwhile, governments in Pakistan, Bangladesh and Sri Lanka are expected to continue fiscal consolidation and economic reforms under IMF-supported programmes. 

It said that the near-term outlook for South Asia is expected to remain robust, with growth projected at 5.7 per cent in 2025 and 6.0 per cent in 2026, “driven by strong performance in India as well as economic recovery in a few other economies”, including Bhutan, Nepal and Sri Lanka. The report said the global economy is at a precarious juncture, marked by heightened trade tensions and elevated policy uncertainty.

The recent surge in tariffs—driving the effective US tariff rate up steeply—threatens to raise production costs, disrupt global supply chains and amplify financial turbulence. Uncertainty over trade and economic policies, combined with a volatile geopolitical landscape, is prompting businesses to delay or scale back critical investment decisions.

These developments are compounding existing challenges, including high debt levels and sluggish productivity growth, further undermining global growth prospects. Global GDP growth is now forecast at just 2.4 per cent in 2025, down from 2.9 per cent in 2024 and 0.4 percentage points below the January 2025 projection.

Credit: Independent News Pakistan (INP)