UN sees modest recovery for Pakistan amid global slowdown

ISLAMABAD: Pakistan’s economy is projected to grow by 2.3 per cent in 2025, marking a moderate rebound after a period of contraction, according to the United Nations’ World Economic Situation and Prospects 2025 report released this week.

The UN notes that falling inflation has allowed most South Asian central banks to ease monetary policy. However, Pakistan, alongside Bangladesh and Sri Lanka, is expected to stick with fiscal consolidation and structural reforms under International Monetary Fund (IMF) programmes.

Inflation in Pakistan fell to just 0.3 per cent in April 2025, providing temporary relief to consumers and improving short-term sentiment. Still, growth remains constrained by structural weaknesses, limited fiscal space and high external debt, the report highlights.

“Pakistan’s recovery is fragile but stabilising,” said Dr Aneel Salman, chair of Economic Security at the Islamabad Policy Research Institute. He said the IMF programme had helped restore macroeconomic discipline, though at the cost of slower near-term growth. “Global headwinds — such as weaker trade and elevated tariffs — continue to weigh on exports and investment,” he added.

Despite these pressures, Salman said there was room for “cautious optimism”, pointing to the resilience of Pakistan’s economy. “To outperform current projections, Pakistan must shift from stabilisation towards growth, with reforms in productivity, the energy sector and digital economy,” he said.

South Asia is forecast to grow by 5.7 per cent in 2025, driven by India and recovering economies like Nepal and Sri Lanka. Still, the global picture is less encouraging.

According to Dawn, the UN expects global GDP growth to slow to 2.4 per cent in 2025, down from 2.9 per cent iin 2024. Trade growth is also projected to halve, reflecting rising tariffs, policy uncertainty and geopolitical tensions. The report warns that these pressures are hitting developing countries hardest, threatening export revenues and heightening debt risks.

For the world’s poorest nations, growth is forecast to slow further next year worsening fiscal vulnerabilities and threatening progress on poverty reduction and sustainable development. The UN is urging greater global cooperation and targeted financial support to protect fragile economies.

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