Pakistan Posts Stronger-Than-Expected Growth: IMF

The International Monetary Fund (IMF) has raised its growth forecast for the Middle East, North Africa (MENA) region, and Pakistan, projecting economic growth of 3.2% in 2025, up from 2.1% in 2024 and higher than its previous April estimate. The improved outlook comes as both oil exporters and importers in the region benefit from favorable global trends. Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, told reporters at the 2025 Annual Meetings that oil exporters have gained from increased output as OPEC+ production cuts are unwound, while oil importers and Pakistan have been buoyed by low energy prices, robust remittances, and a thriving tourism sector. “Looking ahead, growth is expected to rise to 3.7% in 2026, while inflation should remain moderate, helped by lower food and energy prices and tight monetary policies,” Azour said. In its latest Middle East and Central Asia Regional Economic Outlook Report, the IMF said Pakistan’s growth momentum will strengthen further over the next five years, with GDP expected to reach 4.5 percent. The Fund acknowledged Pakistan’s continued progress on economic reforms and noted that financial stability has improved. It said remittances and the current account position have shown positive trends during the fiscal year 2024–25. The report stated that inflation in Pakistan eased earlier this year due to lower food and energy prices, but warned that prices may rise again in 2025–26 as energy subsidies end and electricity tariffs normalize. The IMF observed that structural reforms, particularly in the energy and tax sectors, have helped stabilize revenue and improve investor confidence. It said ongoing efforts in these areas could further boost growth and resilience. According to the report, the severe floods expected in the third quarter of 2025 could have a negative impact on Pakistan’s growth, inflation, and current account balance. However, it said the scale of these effects remains uncertain. The IMF also highlighted that regional tensions could weigh on overall growth across the Middle East and Central Asia, including Pakistan. Still, it noted that Pakistan’s economy is showing steady recovery and resilience. The Fund recognized that Pakistan remains part of the emerging market and middle-income economies, reflecting gradual improvement in macroeconomic fundamentals. It added that with consistent reform implementation, particularly in energy pricing and fiscal management, Pakistan’s economic outlook remains positive and growth is expected to accelerate in the medium term.