ADB projects gradual economic recovery for Pakistan amid risks

The Asian Development Bank (ADB) has released its latest report on Pakistan’s economy, projecting a gradual recovery while warning that significant risks still persist.

According to the report, Pakistan’s economic conditions are showing steady improvement, supported by stabilisation measures and ongoing reforms. However, the ADB cautioned that despite this progress, the economy remains vulnerable to both domestic and external challenges.

The report forecasts Pakistan’s GDP growth at 3.5 percent for the current fiscal year, with expectations that it will rise to 4.5 percent in the next fiscal year. This projected growth is attributed to improving performance in key sectors and increased economic activity.

However, the ADB highlighted potential risks stemming from geopolitical tensions, particularly in the Middle East. It warned that instability in the region could drive up inflation and put additional pressure on Pakistan’s economy.

ADB delegation meets Marriyum Aurangzeb on Punjab projects

Inflation is projected to remain moderate but persistent, with an estimated rate of 6.4 percent in fiscal year 2026, slightly increasing to 6.5 percent in fiscal year 2027. Rising global oil and gas prices were identified as major threats that could impact economic stability.

The report emphasised the need for continued structural reforms to strengthen resilience against external shocks. It also noted that increasing private investment would play a crucial role in supporting sustainable economic growth.

Additionally, improvements are expected in the construction and industrial sectors, which are likely to contribute positively to overall economic performance. The ADB also suggested that the State Bank of Pakistan may adopt a cautiously relaxed monetary policy to support growth.

Despite the optimistic outlook, the ADB stressed that consistent policy implementation and economic discipline will be essential for maintaining stability.