The International Monetary Fund (IMF) expects Pakistan’s economy to grow by 3.5pc in the current fiscal year, falling short of the government’s 4pc target. At the same time, inflation could rise to 9.9pc, putting further pressure on households already struggling with the cost of living. The IMF shared these projections in its latest World Economic Outlook, highlighting the economic challenges Pakistan faces amid growing global uncertainty.
According to the report, Pakistan’s current account could move from a surplus of 0.5pc of gross domestic product (GDP) last year to a deficit of 1pc this year. Meanwhile, inflation may climb from 7.1pc to 9.9pc. However, the IMF expects unemployment to decline from 6.9pc to 6.5pc. The report does not explain this expected improvement, particularly given the country’s growing population and continuing economic pressures.
The growth forecast also falls below the World Bank’s estimate of 3.8pc and the government’s target of 4pc. Although Pakistan’s economy is expected to expand, the pace remains modest. Rising prices, costly imports and limited job opportunities continue to challenge the country’s recovery. For ordinary citizens, higher inflation could make it harder to manage household expenses and maintain their standard of living.
The IMF expects global economic growth to slow to 3.1pc in 2026 before recovering to 3.4pc in 2027. It also forecasts global inflation to reach 4.7pc in 2026 before easing to 4.1pc the following year. According to the fund, investment in technology, particularly artificial intelligence, has helped businesses adapt to economic disruptions. Nevertheless, geopolitical tensions and trade disputes continue to threaten the global outlook.
Pakistan faces additional risks because it relies heavily on imported energy. The IMF warns that further conflict in the Middle East and rising oil prices could increase import costs and fuel domestic inflation. Prolonged instability could also affect remittances and financial support from Gulf countries. As a result, Pakistan may face greater pressure on its external accounts and overall economic stability.
To address these challenges, the IMF has urged governments to improve revenue collection and strengthen public finances. It has also recommended targeted assistance for vulnerable households facing rising living costs. For Pakistan, these measures could help protect low-income families while supporting economic stability. At the same time, the government needs to attract investment, encourage business activity and create more employment opportunities.
Meanwhile, Finance Minister Muhammad Aurangzeb expects Pakistan’s economy to grow by more than 4pc this fiscal year despite high oil prices. He has also outlined plans to privatise five to six state-owned entities, potentially raising more than $1 billion. However, achieving stronger growth will require effective policies and consistent reforms. Ultimately, Pakistan must control inflation, strengthen its economy and protect household purchasing power to achieve sustainable recovery.
