According to the Asian Development Bank’s latest report, Pakistan’s economic growth outlook for 2025 and 2026 has improved, as prices of essential food items are gradually stabilizing after the sharp surge following the floods. The report states that growth forecasts for Pakistan and Sri Lanka have been revised upward in the Asian Development Outlook, mainly due to increased public investment and the flood impact being lower than previously expected.
The ADB noted that Pakistan’s economic performance in fiscal year 2025 exceeded expectations, especially in the last quarter where growth reached 5.7%. The government has revised its GDP growth estimate for FY2025 from 2.7% to 3%. According to the report, inflation fell to 4.7% during the first four months of fiscal year 2026, compared to 8.7% in the same period last year. Stabilization in food prices played a key role in bringing overall inflation down.
The report further states that growth projections for developing Asia and the Pacific for this year and the next have also been upgraded. Exports in the region have been stronger than expected, while trade uncertainty has eased following the completion of trade agreements with the United States. Strong exports of semiconductors and technology products, declining inflation, and stable financial conditions have further strengthened the region’s economic foundations.
The report highlights that overall economic growth in the region is expected to reach 5.1% this year, with a forecast of 4.6% for next year. However, it warns that despite reduced uncertainty due to trade deals, risks remain due to the weak global trade environment, geopolitical tensions, and the potential downturn in China’s property market. Inflation in developing Asia is expected to decline further to 1.6% this year, while next year’s forecast remains unchanged at 2.1%.
