IMF Revises Pakistan's Economic Growth Forecast to 3.6% for 2026

Strategic Insights -

Pakistan's economy is expected to continue its growth trajectory, with the International Monetary Fund (IMF) revising the country's economic growth forecast upward to 3.6% for the fiscal year 2026. The growth is attributed to steady reform implementation, improving financial conditions, and growing confidence. However, the IMF has also cautioned that recent severe flooding in Q3 2025 may negatively impact growth, inflation, and the current account beyond present expectations.

Key Takeaways:

  • The IMF has revised Pakistan's economic growth forecast upward to 3.6% for the fiscal year 2026, up from its earlier projection of 3.25% to 3.5% announced last week.
  • Pakistan's GDP grew by 3.04% in the last financial year, 2024-25.
  • Inflation in Pakistan is expected to rise again in 2026 due to the normalisation of prices and the phasing out of short-term electricity subsidies.
  • Pakistan's growth is projected to increase to 3.6% in 2026, supported by steady reform implementation, improving financial conditions, and growing confidence.
  • The IMF has cautioned that recent severe flooding in Q3 2025 may negatively impact growth, inflation, and the current account beyond present expectations.
  • Cyclically adjusted primary fiscal balances are projected to improve in Middle East and North Africa, Afghanistan, and Pakistan (MENAP) oil-importing nations, due to tax policy and administration reforms.
  • Energy subsidy reforms in countries like Egypt, Morocco, and Pakistan have helped contain spending.
  • Higher borrowing costs could exacerbate fiscal and financial vulnerabilities across the region, particularly in economies with high projected government gross financing needs and banking sectors holding large shares of sovereign bonds, such as Algeria, Egypt, and Pakistan.

Statistics:

  • Pakistan's economic growth forecast has been revised upward to 3.6% for the fiscal year 2026.
  • The country's GDP grew by 3.04% in the last financial year, 2024-25.
  • The IMF expects inflation to rise again in 2026, attributed to the normalisation of prices and the phasing out of short-term electricity subsidies.
  • Pakistan's GDP growth is projected to increase to 3.6% in 2026.
  • The IMF has predicted that cyclically adjusted primary fiscal balances will improve in MENAP oil-importing nations due to tax policy and administration reforms.

Sources:

  • The News, September 11, 2025 (exact wording)
  • IMF, Regional Economic Outlook for the Middle East and Central Asia, 2025 (exact wording)