The Asian Development Bank (ADB) has revised Pakistan’s economic growth projections upward for both 2025 and 2026, citing stabilizing food prices and a stronger-than-expected performance following the devastating floods. In its latest report, Asian Development Outlook: Growth Steadies but Uncertainty Lingers, the ADB noted that increased public investment and the relatively limited economic disruption from the floods contributed to the positive revision. Pakistan’s GDP growth forecast for FY2025 has been raised to 3 percent, up from the previous estimate of 2.7 percent.
Despite the June 2025 floods, Pakistan’s economy expanded by 5.7 percent in the fourth quarter of FY2025, while large-scale manufacturing has shown strong momentum in early FY2026. Inflation has also eased significantly, with the first four months of FY2026 recording 4.7 percent, compared with 8.7 percent during the same period last year. Food prices, which spiked after the floods, are now stabilizing, contributing to the improved economic outlook.
ADB highlighted that stronger exports, reduced trade uncertainty following new agreements with the United States, and moderating inflation have enhanced Pakistan’s regional economic standing. For developing Asia and the Pacific as a whole, growth is now expected to reach 5.1 percent in 2025, up from the previous projection of 4.8 percent, while the 2026 forecast has been slightly raised to 4.6 percent.
ADB Chief Economist Albert Park noted that Asia’s solid economic fundamentals continue to support steady growth, though risks remain, including potential trade tensions, geopolitical pressures, financial market volatility, and a possible slowdown in China’s property sector. Inflation across developing Asia is projected to fall to 1.6 percent this year and stabilize at 2.1 percent in 2026.
The report underscores Pakistan’s gradual recovery and resilience, highlighting improving macroeconomic indicators such as GDP growth, industrial output, export performance, and inflation management, signaling a cautiously optimistic outlook for the country’s economy in the near term.
