The International Monetary Fund (IMF) has warned of sluggish economic growth and rising inflation in Pakistan, projecting that price pressures will intensify even as economic expansion remains limited over the next two fiscal years.
In its latest World Economic Outlook (WEO) report, the IMF forecast Pakistan’s economic growth at 3.6% for fiscal year 2026 and 3.5% for fiscal year 2027, while inflation is expected to rise from 7.1% to 9.9% over the same period.
The IMF’s projections indicate that Pakistan’s economic growth will remain modest, with the growth rate expected to ease from 3.6% in the current fiscal year to 3.5% in the next.
The outlook highlights the challenge of sustaining economic recovery while managing inflationary pressures. The report also projects Pakistan’s unemployment rate at 6.9% for the current year, before declining to 6.5% in the next fiscal year.
Inflation expected to rise to 9.9%
Inflation remains a key concern in the IMF’s assessment of Pakistan’s economic outlook. The Fund projects inflation at 7.1% for the current fiscal year, with the rate expected to increase to 9.9% in 2027.
The forecast points to continued pressure on the country’s price outlook even as growth remains constrained.
Current account deficit projected at 1% of GDP
The IMF expects Pakistan’s current account deficit to remain at 1% of gross domestic product (GDP) in fiscal year 2027.
The projection provides an additional indicator of the country’s external economic outlook alongside the Fund’s forecasts for growth, inflation and unemployment.
The IMF said the global economy had once again demonstrated resilience despite geopolitical tensions, with technological advances and the ability of economies to adapt to changing conditions helping cushion the impact of crises.
However, global economic growth is expected to slow to 3.1% in 2026 before improving to 3.4% in 2027, according to the report. Global inflation is forecast to reach 4.7% in 2026 before easing to 4.1% in 2027.
Geopolitical conflicts, trade tensions pose risks
The IMF warned that an escalation in global conflicts could undermine economic growth, while energy-importing countries face greater challenges amid uncertain global economic conditions.
The report also identified shifting expectations surrounding artificial intelligence (AI), trade tensions and government fiscal issues as potential factors that could weaken global growth.
These risks could add to uncertainty for economies already facing pressure from changes in global markets and geopolitical developments.
AI investment could support global growth
Despite the risks, the IMF said investment in artificial intelligence and improvements in productivity could help boost global economic growth.
The report also indicated that a sustained reduction in geopolitical and trade tensions could strengthen the global outlook, highlighting the importance of greater stability in international relations and trade.
The Fund’s projections point to a mixed global picture: resilience and technological progress are providing support, but geopolitical uncertainty, inflation and trade-related risks continue to threaten the pace of economic expansion.
