The Asian Development Bank has maintained its Pakistan GDP forecast at 3.7% for fiscal year 2027, saying continued reforms, stronger foreign exchange reserves and renewed access to international capital markets are supporting the country’s economic outlook while warning that expensive energy and external uncertainty could hold back faster growth.
In its latest report, the Manila-based lender noted that Pakistan’s gross domestic product had risen from 3.2% in fiscal year 2025 to 3.7% in the previous financial year. It described the increase as broad-based, with recovery in the services and manufacturing sectors alongside an improvement in agriculture.
The bank said growth in fiscal year 2026 was supported by expansion in manufacturing and services. Despite floods, agriculture grew by 2.9%, while private investment increased by 8.6% amid lower interest rates and improved business confidence, according to the report.
The ADB also said overall international foreign exchange reserves increased, strengthening Pakistan’s resilience to external pressures. It added that an improvement in the sovereign credit rating was expected to support higher private investment.
However, the lender cautioned that the Middle East conflict slowed economic activity during the final quarter of the previous financial year. It warned that expensive energy and external uncertainty could limit a faster pace of growth.
Overall, the ADB said Pakistan’s economy had made progress in strengthening economic stability over the past two years, maintaining that reforms and the promotion of private investment would be important for inclusive growth.
On the regional outlook, the ADB projected that economic growth across developing Asia and the Pacific would moderate from 5.5% in 2025 to 5% this year before edging up to 5.1% in 2027.
“The region has remained resilient, but the risks are growing,” ADB President Masato Kanda said. “A strengthening El Nino with drier conditions means smaller harvests and reduced hydropower, pushing food and energy prices higher, and hitting the most vulnerable the hardest.”
Kanda added that the prolonged energy crisis and renewed risks in financial markets made it even more important for governments to prepare and protect the people most exposed.
The lender’s decision to hold the Pakistan GDP forecast at 3.7% comes as Islamabad continues to push reforms aimed at stabilising the economy and attracting private investment. The ADB’s assessment suggests that while macroeconomic indicators have improved, structural challenges — particularly the cost of energy — remain a drag on the pace of recovery.
Source: Geo News