The International Monetary Fund (IMF) has maintained its forecast for Pakistan’s economic growth at 3.6% for fiscal year 2026-27, keeping its outlook unchanged from April and projecting expansion below the federal government’s 4% growth target.
In its latest World Economic Outlook (WEO), the IMF also warned that inflationary pressures are likely to persist globally, including in Pakistan, as geopolitical tensions, higher commodity prices, and supply chain disruptions continue to cloud the global economic outlook.
Growth outlook remains below government target
According to the IMF, Pakistan’s economy is expected to grow by 3.6% during the current fiscal year, indicating a steady recovery but one that falls short of the government’s expectations.
The unchanged projection suggests the Fund sees limited improvement in economic momentum despite easing inflation, improved macroeconomic stability, and ongoing structural reforms.
If the forecast holds, Pakistan would once again miss its official growth target unless economic activity accelerates during the remainder of the fiscal year.
Pakistan missed last year’s growth goal
The IMF also noted that Pakistan failed to achieve its growth objective in the previous fiscal year.
According to the report, the country’s economy expanded by 3.6%, compared with the government’s target of 4.2%, marking another year in which actual economic performance lagged official projections.
With the Fund maintaining the same forecast for FY2026-27, Pakistan could fall short of its growth target for a second consecutive year.
Inflation expected to remain elevated
While acknowledging progress in stabilizing the economy, the IMF expects inflation to remain a challenge.
The report projects Pakistan’s average inflation rate at 8.4% during FY2026-27, indicating that households and businesses are likely to continue facing higher living and operating costs.
The IMF said inflation risks extend beyond Pakistan, with several global developments threatening price stability across both advanced and emerging economies.
Global risks remain significant
The Fund highlighted the ongoing conflict in the Middle East as one of the biggest risks facing the global economy.
According to the report, continued geopolitical tensions could lead to volatility in oil and commodity prices, increasing import costs for energy-dependent economies such as Pakistan.
The IMF also warned that disruptions to global supply chains remain a concern, potentially affecting international trade, manufacturing, investment, and economic growth.
Global economy expected to improve gradually
Despite these challenges, the IMF expects the global economy to continue expanding.
The report forecasts global GDP growth of 3% in 2026, followed by a modest improvement to 3.4% in 2027 as economic conditions gradually stabilize.
However, the Fund cautioned that geopolitical uncertainty, trade disruptions, and inflationary pressures continue to pose downside risks to the global recovery.
AI seen as a driver of future growth
The IMF identified artificial intelligence and technological innovation as important sources of long-term economic growth.
According to the report, wider adoption of AI has the potential to improve productivity, increase efficiency, and create new business opportunities across multiple sectors.
The Fund said countries that invest in technology, innovation, and workforce development could benefit from stronger long-term economic performance.
IMF calls for continued reforms
The IMF urged governments, including Pakistan’s, to accelerate structural reforms to strengthen economic resilience and improve sustainable growth.
The report emphasized the need for policies that support fiscal stability, control inflation, enhance productivity, attract private investment, and prepare economies for future external shocks.
For Pakistan, the latest outlook suggests that while macroeconomic conditions have improved compared with previous years, sustained reforms and stronger investment will be critical to achieving higher growth and maintaining long-term economic stability.
