Pakistan is projected to experience moderate economic growth in 2025, with its Gross Domestic Product (GDP) expected to grow by 2.3%, according to the United Nations World Economic Situation and Prospects 2025 report, released this week.
The report highlights that Pakistan, Bangladesh, and Sri Lanka are continuing economic reforms and fiscal consolidation under IMF-supported programs, as inflationary pressures ease across South Asia.
Declining inflation has enabled most central banks in the region to pursue monetary easing, contributing to regional economic stabilization.
The UN report notes that South Asia as a whole is expected to grow by 5.7% in 2025 and 6.0% in 2026, buoyed by India’s strong performance and recoveries in Bhutan, Nepal, and Sri Lanka.
However, the global economic context remains fragile. Worldwide GDP growth is now forecast at 2.4% in 2025, a decline from 2.9% in 2024, and 0.4 percentage points lower than the UN’s January projection.
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This slowdown is driven by increased trade tensions, a steep rise in tariffs—particularly by the United States—and continued policy uncertainty, which are collectively straining global supply chains, investment flows, and productivity growth.
For developing countries, especially least developed nations, the global downturn poses serious challenges to job creation, poverty reduction, and inequality mitigation.
Growth in these economies is expected to decelerate from 4.5% in 2024 to 4.1% in 2025, amidst falling export revenues, tighter financial conditions, and declining development assistance.
Tariff shocks, inflationary pressures, and climate-related disruptions are also compounding fiscal vulnerabilities.
Food inflation, averaging over 6%, continues to disproportionately impact low-income households, especially in Africa, South Asia, and Western Asia.
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More than 20 developing countries are experiencing double-digit inflation, the report warns. Major global economies are also facing slowdowns.
U.S. growth is projected to fall to 1.6%, EU to remain at 1.0%, China to slow to 4.6%, and India to 6.3%.
Emerging economies like Brazil, Mexico, and South Africa are experiencing growth downgrades due to falling investment and commodity prices.
The report calls for strengthened multilateral cooperation and policy coordination to restore stability and ensure inclusive growth.
Areeba Kanwal is a contributor at The Diplomatic Insight and has passion for International Relations and diplomacy.
