The International Monetary Fund (IMF) has projected Pakistan’s economic growth at 3.5 per cent for the current fiscal year, while forecasting headline inflation to climb near double digits to 9.9 per cent.
The projections were released in the lender’s flagship World Economic Outlook report, launched during the World Bank-IMF annual meetings in Bangkok, shortly after the Washington-based institution concluded its review of Pakistan’s economic situation last week.
Growth Lags Official Targets
The IMF’s 3.5 per cent growth forecast represents a modest slowdown from the 3.6 per cent recorded last year, though it remains slightly higher than the 3.2 per cent growth rate registered in FY2025.
The fund’s estimate is noticeably lower than domestic targets and peers’ projections. It trails the Pakistani government’s 4 per cent growth target for the current fiscal year, as well as the 3.8 per cent growth rate forecast published by the World Bank last month.
Alongside the subdued growth trajectory, the fund projected headline inflation to rise significantly to 9.9 per cent from 7.1 per cent last year, keeping consumer price pressures close to double-digit levels for another year.
External Deficit and Labor Market Divergence
On external balances, the IMF estimated that Pakistan’s current account deficit will widen to 1 per cent of gross domestic product (GDP). This marks a reversal from the 0.5 per cent surplus achieved in FY2025.
Conversely, the report projected an easing trend in the domestic labor market. The unemployment rate is forecast to decline to 6.5 per cent this year, down from 6.9 per cent last year and 7.1 per cent a year earlier.
The Washington-based lending agency did not explain the projected drop in joblessness, leaving unresolved how unemployment would contract amid an expanding population, elevated price inflation, and a deteriorating current account balance.
Global Economic Resilience
The updated outlook for Pakistan emerges against an evolving global macroeconomic backdrop. The IMF noted that global economic activity has demonstrated resilience despite confronting multiple challenges.
According to the fund’s international estimates, global economic growth is projected to decelerate to 3.1 per cent in 2026, before rebounding to 3.4 per cent in 2027.
