ADB slightly raises Pakistan’s growth forecast to 2.7%

ISLAMABAD: The Asian Development Bank (ADB) has raised its estimate for Pakistan’s economic growth in the fiscal year 2025 to 2.7 per cent, up slightly from earlier projections. The revision comes on the back of stronger-than-expected performance in the country’s industrial and services sectors, despite a slump in agriculture.

In its latest Asian Development Outlook (ADO) report released on Wednesday, the ADB stated that Pakistan’s economy provisionally expanded by 2.7 per cent in the financial year ending June 30, 2025. The updated figure reflects a modest improvement over previous expectations, largely due to better output in manufacturing and services. 

The report noted that while agricultural output declined as anticipated, the resilience shown by other sectors helped offset the impact. The ADB has kept its growth forecast for FY2026 unchanged. 

On the inflation front, the ADB revised its forecast for FY2025 downward, citing a quicker-than-expected fall in both food and non-food prices over the first 11 months of the year. However, the inflation outlook for FY2026 remains the same. 

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At a broader level, the ADB has trimmed its economic growth forecasts for developing Asia and the Pacific. The region is now expected to grow by 4.7 per cent in 2025, down 0.2 percentage points from the estimate issued in April. For 2026, the growth forecast has been slightly lowered to 4.6 per cent. 

The downgrade comes amid growing global trade tensions and higher tariffs imposed by the United States, which are expected to dampen exports and weigh on domestic demand across several economies. 

The ADB also flagged other risks such as ongoing geopolitical conflicts, supply chain disruptions, and volatility in energy prices. Concerns over China’s property sector were also highlighted as a potential drag on regional growth. 

“Asia and the Pacific have weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said ADB Chief Economist Albert Park. “Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.” 

In South Asia, the ADB revised its 2025 growth forecast slightly down to 5.9 per cent from 6 per cent. The adjustment reflects a small downgrade in growth expectations for India and Sri Lanka, linked to the impact of US trade policies.

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