ADB revises Pakistan’s growth forecast to 3 per cent for 2025

ISLAMABAD: Pakistan’s economy is expected to grow by 3 per cent in the fiscal year 2025, according to the Asian Development Bank (ADB).

This is a slight improvement from the previous forecast of 2.8 per cent. Meanwhile, inflation is expected to ease significantly, dropping to 10 per cent from the 15 per cent forecast for 2024.

In its latest report, the ADB shared that growth for the ongoing year has also been revised upwards to 2.5 per cent, matching updated government estimates. The bank says inflation is cooling faster than expected, helping bring down the forecast for 2025.

By August, inflation had already dipped to single digits, thanks to a combination of factors – like improved food supplies, fewer demand pressures, and global commodity prices moving in Pakistan’s favour. Even delayed hikes in energy prices played a part.

The ADB is optimistic about Pakistan’s recovery, especially with the new International Monetary Fund (IMF) programme approved in September. With more stable economic conditions, industrial growth is set to pick up as import restrictions are lifted, foreign exchange becomes easier to access, and investors regain confidence.

The bank also noted that a flexible monetary policy encouraged by dropping inflation could further stimulate private investment.

However, the agricultural sector may struggle in 2025 owing to the heavy monsoon rains that caused flood-like conditions in parts of the country. Major crops like wheat and cotton are expected to take a hit.

Pakistan isn’t alone in seeing its outlook improve – Sri Lanka has also had its growth forecast revised upwards as both countries bounce back from the economic troubles of the past couple of years.

However, it’s a different story for Bangladesh and the Maldives, where political unrest and fiscal tightening have caused downward revisions for 2025. Nepal is also expected to face slower growth compared to earlier predictions.

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