The Asian Development Bank (ADB) has projected Pakistan’s economy to grow by 3.7% during FY2026-27, falling short of the federal government’s 4% growth target, while warning that inflation is likely to rise due to higher global energy prices and ongoing geopolitical tensions in the Middle East.
In its latest Asian Development Outlook, the ADB forecast Pakistan’s economic growth at 3.7%, matching its projection for Bangladesh.
Inflation Expected to Rise
The ADB expects Pakistan’s average inflation rate to increase from 7.2% to 8.3% during the current fiscal year.
According to the report, rising global energy prices and continued tensions in the Middle East are likely to increase the cost of fuel, electricity, and essential commodities, putting additional pressure on consumer prices.
South Asia Growth Outlook
The ADB projects South Asia’s economy to grow by 6.0% overall, with India expected to remain the region’s fastest-growing economy at 6.6%.
Other regional forecasts include:
- Bhutan – Second-fastest growing economy in South Asia
- Sri Lanka – 4.0%
- Nepal – 3.9%
- Pakistan – 3.7%
- Bangladesh – 3.7%
- Afghanistan – 2.3%
- Maldives – 1.0%
Asia’s Growth Revised Downward
The ADB revised its overall Asia growth forecast for 2026 down to 4.9%, citing geopolitical tensions, rising debt levels, higher financing costs, and uncertainty surrounding global trade.
The report also warned that increasing energy and fertiliser prices could negatively affect agricultural production, food security, and economic stability across the region.
Risks Remain
The ADB advised governments across Asia to balance inflation control with measures that support economic growth. It added that regional economic activity could improve in 2027 if global conditions become more stable.
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