The International Monetary Fund (IMF) has lowered Pakistan’s economic growth forecast and raised its inflation outlook for the coming fiscal year, citing ongoing external pressures and economic challenges.
In its latest World Economic Outlook report released Tuesday during the spring meetings in Washington, the IMF projected Pakistan’s gross domestic product growth at 3.6% for the current fiscal year. Growth is expected to ease slightly to 3.5% in fiscal year 2026-27, down from an earlier estimate of 4.1%.
The Fund also revised Pakistan’s inflation forecast upward to 8.4% for the next fiscal year, compared with 7.2% projected for the current year.
Meanwhile, the IMF more than doubled its projection for Pakistan’s current account deficit to 0.9% of GDP in the next fiscal year, up from 0.4% in the current year. Unemployment is expected at 6.9% this fiscal year, compared with 7.1% previously.
' Pakistan committed to program'
Separately, Pakistan’s finance minister said the government remains committed to its IMF-supported reform program while managing the economic impact of external shocks.
Finance Minister Muhammad Aurangzeb met with IMF First Deputy Managing Director Dan Katz on the sidelines of the meetings, according to a statement from Pakistan’s Finance Ministry. Aurangzeb thanked IMF staff for progress on program reviews and said a staff-level agreement had been reached, pending approval by the IMF Executive Board.
He also briefed IMF officials on the economic effects of an ongoing regional conflict, particularly on energy supplies and logistics, and outlined measures including demand management and targeted subsidies to protect vulnerable populations.
Aurangzeb said Pakistan is assessing broader impacts on inflation, growth, exports and remittances, and reaffirmed the government’s commitment to fiscal discipline and reforms under the IMF program.
In a separate IMF panel discussion, the minister described the Middle East conflict as a major global supply shock, comparable to disruptions seen during the COVID-19 pandemic. He noted rising concerns over energy security and supply chain resilience.
Despite challenges, Aurangzeb pointed to increased transshipment activity at Karachi Port in recent weeks as a potential opportunity for Pakistan in shifting global trade patterns.
He emphasized the importance of building strategic reserves, maintaining fiscal discipline and leveraging technology to strengthen economic resilience.
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