The World Bank’s latest economic report on the Middle East, North Africa, Afghanistan, and Pakistan (released Tuesday) projects Pakistan’s economic growth rate at 2.6% for FY2026, as devastating floods continue to impact agricultural output and inflationary pressures re-emerge.
According to the report, Pakistan’s real GDP growth at factor cost is expected to reach 2.7% in FY2024–25, slightly higher than the 2.5% expansion recorded in FY2023–24. However, for FY2025–26, real GDP growth is projected to slow to 2.6% due to the ongoing severe floods affecting forecasts.
Initial estimates suggest that agricultural output in Punjab may decline by at least 10%, impacting key crops such as rice, sugarcane, cotton, wheat, and maize.
Growth momentum is expected to pick up in FY2026–27, reaching around 3.4%, supported by improved agricultural production, lower inflation and interest rates, restored consumer and business confidence, and higher private consumption and investment.
The World Bank noted that Pakistan — which has historically maintained a complex structure with high tariffs — could benefit in terms of exports and overall economic growth through the recently approved five-year reform plan (2025–2030), which aims to halve tariffs.
The report also highlighted that inflation has been declining across regional economies where it had remained elevated in recent years. In Pakistan, inflation dropped to single digits in FY2024–25 as food and energy price increases moderated. However, due to supply chain disruptions caused by ongoing severe floods, inflation is expected to rise again by 2027.
