Multilaterals forecast Pakistan growth below government target

The Asian Development Bank has forecast Pakistan's economic growth at 3.7 per cent for the current fiscal year, 0.3 per cent lower than the government's forecast of 4 per cent for the year. The World Bank projects 3.2 per cent and the International Monetary Fund 3.5 per cent. The ADB figure is identical to the provisional growth rate for 2025-26 recorded on the Pakistan Bureau of Statistics website, according to a Business Recorder editorial that reviewed the projections.

The IMF team is in Pakistan to deliberate on the fourth quarterly review and the third review of the Resilience and Sustainable Fund, the editorial said, with a staff-level agreement required before the staff submits it to the board for approval of the next tranche. The editorial raised concerns over whether Fund staff will insist on withdrawing recently extended concessions on petrol for motorcyclists and cars under 800cc — no more than 75 billion rupees, or 4.4 per cent of the total budgeted collections under the budgeted Petroleum Levy — or on raising taxes to meet the shortfall, or cutting public sector development programme spending, which it said carries negative implications for growth.

The editorial attributed the projected rise in GDP largely to industry, where growth moves from 1.96 per cent in 2024-25 to 6.61 per cent in 2025-26. That increase has been challenged by large-scale manufacturers, who say they face a sharp rise in input costs after administrative decisions sought by the IMF raised tariffs to meet full cost recovery criteria. On credit, Finance Division data cited by the editorial showed that the flow to the private sector was negative 232.1 million rupees in July 15 August 2025 and declined to negative 393.4 million rupees in the comparable period this year, with the policy rate at 11.5 per cent — more than double that of regional competitors, the editorial said. The textile sector has cited the closure of more than 100 units as proof that industrial output has not increased.

On prices, the ADB projects inflation at 8.3 per cent this year, the World Bank at 8.2 per cent and the IMF at 8.4 per cent. The editorial noted that figures cited for Pakistan itself put inflation at 9.2 per cent in July and 11.2 per cent in August, which would leave it well above the multilateral projections. The State Bank of Pakistan has left its medium-term projection of 5 to 7 per cent unchanged in its Monetary Policy Statement — a range the editorial said allows it to avoid tightening further by raising the policy rate from 11.5 per cent.

The editorial concluded that annual projections may not be achieved by the end of the year as external and internal factors bear on forecasts, and cautioned that statistics must reflect ground realities rather than the wishes of the administration, so that the government can take timely policy decisions to mitigate the possibility of poor performance in any macroeconomic indicator.