The World Bank has lowered Pakistan’s growth outlook for the current fiscal year to 2.6 percent, down from its earlier projection of 3.1 percent. The revision comes as the country continues to face the economic impact of devastating floods and rising inflation.
In its latest regional economic report for the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP), the Washington-based lender said that widespread flooding has slowed economic recovery. The bank noted that the damage to agriculture, infrastructure, and livelihoods has weighed heavily on production and income levels across affected regions.
According to the report, real GDP growth in Pakistan is expected to remain at 2.6 percent in FY2025/26, reflecting the prolonged effects of the disaster. The floods have also led to an increase in inflation, which the World Bank expects to reach around 7.2 percent. These challenges, combined with fiscal pressures and external financing needs, have made the recovery process more difficult.
The government had initially targeted 4.2 percent growth for the year and later revised it to 3.5 percent as part of its discussions with the International Monetary Fund (IMF). However, the new projection from the World Bank suggests that achieving even moderate expansion will be challenging without structural reforms and improved climate resilience.
Economists believe that Pakistan’s growth outlook depends largely on the stability of its agricultural output, policy consistency, and external financing. They emphasize the need for investment in flood prevention and long-term infrastructure development to safeguard future growth.
The report concludes that Pakistan’s growth outlook remains fragile amid persistent climate risks, high inflation, and external vulnerabilities. The World Bank urged authorities to strengthen fiscal discipline and focus on sustainable development to ensure a more stable economic future.
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