Global lenders warn of slow but steady recovery in Pakistan

Recent assessments by the World Bank and the Asian Development Bank (ADB) suggest that Pakistan’s economy is on a path of gradual recovery, although growth remains modest and key risks continue to persist.

The World Bank noted that rising oil and gas prices, largely driven by tensions in the Middle East, have added pressure on Pakistan’s economy as well as other developing nations. As a result, the country’s economic growth for the current fiscal year is expected to fall short of its 4.2 percent target, with projections indicating growth of around 3 percent.

The report also highlighted concerns about inflation, which is expected to increase to approximately 7.4 percent by 2026. Additionally, the current account balance, which had shown signs of improvement, may slip back into deficit, potentially reaching around 1.2 percent of GDP. Declining remittances from Gulf countries and fluctuations in the stock market are also seen as contributing risk factors.

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Meanwhile, the Asian Development Bank provided a slightly more optimistic outlook, stating that Pakistan’s economy continues to show signs of improvement. It forecasts growth of 3.5 percent for the current fiscal year, with a further increase to 4.5 percent expected in the following year.

Despite these positive signals, the ADB also warned of ongoing challenges, including high energy costs, geopolitical uncertainties, weak remittance inflows, and exposure to external shocks.

Both institutions emphasized that while economic stability is gradually improving, sustained reforms and prudent fiscal management will be essential to ensure long-term growth and resilience.