Pakistan’s economy is projected to grow by 2.6% in FY2025-26, according to the latest World Bank economic report on the Middle East, North Africa, Afghanistan & Pakistan (MENAAP) released on Tuesday.
The report noted that real GDP at factor cost grew by 2.7% year-on-year in FY2024-25, compared to 2.5% in FY2023-24. The modest growth forecast for FY2025-26 reflects the impact of ongoing floods on the agriculture sector.
Early estimates indicate that agricultural output in Punjab is expected to decline by at least 10%, affecting major crops including rice, sugarcane, cotton, wheat, and maize.
For FY2026-27, the World Bank projected growth to accelerate to 3.4%, supported by higher agricultural output, lower inflation and interest rates, and a rebound in private consumption and investment.
The report highlighted a five-year tariff reform plan (2025–2030), aimed at reducing Pakistan’s historically high tariffs by half, which is expected to support export growth.
Inflation in Pakistan fell to single digits in FY2024-25 as food and energy price increases eased. However, disruptions to food supply chains due to floods are expected to raise inflation through 2027.
The World Bank also noted that poverty at the lower-middle-income line in Pakistan declined by 9.4 percentage points between 2011 and 2018. Economic shocks and natural disasters since 2020 have slowed this reduction, and Pakistan accounts for a significant share of the MENAAP region’s poor population.
The report pointed out that Pakistan has one of the highest fertility rates in the region, with projections indicating a fall below replacement level within one generation. It added that greater female participation in the labour market could increase GDP per capita by 20–30%.
In the broader MENAAP region, economic growth is expected to reach 2.8% in 2025 and 3.3% in 2026, with risks including global uncertainty, trade policy shifts, and ongoing conflict and displacement.
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