The Asian Development Bank (ADB) has forecast Pakistan’s economy to grow by 3% in 2025-26. The projection reflects gradual progress under ongoing reforms but also highlights key risks.
In its latest Asian Development Outlook report, ADB noted that structural issues and inflation remain major concerns. Recurrent floods and natural disasters are also expected to weigh on growth by damaging agriculture and disrupting supply chains.
The government of Pakistan has set a higher growth target of 4.2% for the year. However, the report suggests that achieving this goal will be difficult without continued reforms and strong policy action.
According to ADB, inflation is projected to average 6% this year. The increase is linked to rising gas tariffs, higher food prices due to floods, and persistent supply chain disruptions. To manage these pressures, the State Bank of Pakistan is expected to maintain a cautious monetary stance.
Despite these challenges, there are signs of improvement. Foreign exchange reserves and investment inflows are likely to increase, supporting gradual economic recovery. ADB believes that medium-term growth prospects remain positive if reforms are implemented consistently.
ADB Country Director Emma Fan stressed that Pakistan must maintain reforms to build investor confidence and strengthen the economy. She also pointed out that recent trade agreements, including one with the United States, could improve business sentiment and attract more investment.
The report further highlights that while natural disasters will continue to affect agriculture and infrastructure, incentives for the construction sector may help offset some losses. This could also provide jobs in urban areas, softening the impact on households.
Overall, the latest outlook shows cautious optimism. While growth is possible, Pakistan must address inflation, climate vulnerability, and structural weaknesses to achieve long-term stability.
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