Islamabad (TDI): The Asian Development Bank (ADB) has forecasted that Pakistan’s Gross Domestic Product (GDP) growth rate will reach 3% in financial year 2026, while also suggesting a decline in the rate of inflation.
It has predicted the country’s economy to grow by 2.5% in FY2025. These forecasts were made in the Asian development Outlook (ADO) April 2025.
The report was finalized before the announcement of reciprocal tariffs by the United States on April 2, however, it does take into account the ways in which higher tariffs would affect the economic growth in the Asia and the Pacific region.
Pakistan’s economic growth would remain steady as a result of macroeconomic policies and economic reforms undertaken by the current government with the help of IMF Extended Fund Facility arrangement, the report noted.
“Adherence to the economic adjustment program is critical for building resilience and enabling sustainable and inclusive growth,” it read.
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According to ADB’s Country Director for Pakistan, Emma Fan, “Pakistan’s economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability.”
She further stated, “Growth is projected to persist in 2025 and to increase in 2026. Sustained implementation of policy reforms is vital to buttress this growth trajectory and fortify fiscal and external buffers.”
The economic growth which has been forecasted by the ADB resulted from a rebound in private sector investment, and a stable foreign exchange market.
The successful implementation of the reforms would stabilize the economy and remove the structural barriers to growth, benefitting both the industrial and private sectors.
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The Asian Development Bank has also forecasted the average inflation rate to decline to 6 percent in the fiscal year 2025, and 5.8 percent in the next year, due to stable global oil and commodity price, and moderate domestic demands.
It also highlighted that there is a continued decline in the female labor force in Pakistan, compared to other neighboring and regional countries.
Encouraging more women to work outside their homes would significantly contribute to the productivity and economic output, meanwhile advancing women empowerment in Pakistan.
The Asian Development Bank suggested the Government of Pakistan to invest in making the public transport safe for women as well as initiate female educational and vocational training programs, which would equip them with the necessary skills to participate in the economic progress of the country.
Javaria Khalid is a Web Contributor at The Diplomatic Insight Magazine. She specializes in covering geopolitical developments, international relations, diplomatic, and socio-economic developments in Europe and Pakistan.
