Pakistan’s current account deficit is expected to widen in fiscal year 2026–27, according to the World Bank’s latest Global Economic Prospects report. The widening deficit is projected to result from rising imports and the normalization of remittances, which may increase external financing pressures.
The World Bank projected Pakistan’s economic growth at 3 percent for the current fiscal year, below the government’s target of 4.2 percent. This forecast is 0.1 percentage points lower than the Bank’s June 2025 estimate, with growth expected to improve to 3.4 percent in FY27. Economic activity is likely to benefit from agricultural recovery after recent floods and ongoing reconstruction efforts. Inflation has eased due to lower food prices, although monetary policy remains cautious despite recent interest rate cuts.
On trade, the World Bank cautioned that higher US tariffs could negatively impact Pakistan’s exports, while regional trade sanctions and policy uncertainty may further affect economic performance. Private sector reforms are highlighted as a potential driver for boosting employment and economic growth. Early signs of recovery, including increased industrial activity and higher bank lending, suggest gradual improvement.
Globally, the World Bank noted that economic stability is stronger than expected, though growth remains modest. Global GDP is projected to rise by 2.6 percent in 2026 and 2.7 percent in 2027, while the gap in living standards between developing and advanced economies continues to widen.
