ADB Upgrades Pakistan’s Growth Outlook

The Asian Development Bank has upgraded Pakistan’s economic growth outlook for both 2025 and 2026, noting that prices of key food items have begun to stabilize after rising sharply in the months following the floods. In its latest Asian Development Outlook: Growth Steadies but Uncertainty Lingers, ADB said growth projections for South Asia have been revised upward for Pakistan and Sri Lanka due to increased public investment and a smaller-than-expected economic impact from flooding. Pakistan’s fiscal year 2025 forecast has been improved after a stronger-than-anticipated performance in the fourth quarter. The government has updated its GDP growth estimate for FY2025 to 3 percent, up from the earlier figure of 2.7 percent. ADB noted that despite disruptions caused by the June 2025 floods, Pakistan’s economy grew 5.7 percent in Q4 FY2025, while large-scale manufacturing has shown strong expansion in recent months of FY2026. Inflation has also eased. For the first four months of FY2026, inflation stood at 4.7 percent, down from 8.7 percent during the same period last year. ADB said food prices, which surged after the floods, have now begun to stabilise. The report highlights that stronger exports, reduced trade uncertainty following new agreements with the United States, and moderating inflation have improved the overall regional outlook. Developing Asia and the Pacific is now expected to grow 5.1 percent this year, an upgrade from the earlier projection of 4.8 percent. The outlook for next year has also been raised slightly to 4.6 percent. ADB Chief Economist Albert Park said Asia’s solid fundamentals continue to support steady growth, but risks remain, including renewed trade tensions, geopolitical pressures, financial volatility, and a possible deeper downturn in the People’s Republic of China’s property market. Inflation across developing Asia is expected to fall to 1.6 percent this year and remain at 2.1 percent next year.