KEY POINTS
- Pakistan’s GDP projected at 3% in FY25‑26, rising to 3.4% in FY26‑27
- Recovery supported by agriculture and reconstruction efforts following 2025 floods
- Current account deficit expected to widen with stronger imports and normalising remittances
- Global economy showing resilience, but growth remains uneven across regions
ISLAMABAD: Pakistan’s economy is expected to grow by 3 per cent in fiscal year 2025-26 before accelerating to 3.4 per cent in 2026-27, according to the World Bank’s latest Global Economic Prospects (GEP) report released in January 2026.
The report notes that the recovery is being driven by a rebound in agricultural production and reconstruction activity following the severe floods of 2025.
The World Bank cautioned that Pakistan’s current account deficit is likely to widen in FY26‑27 as import demand increases alongside stronger economic activity and remittance inflows gradually normalise.
The report also highlighted that Pakistan, as an oil-importing economy, could face export challenges if global trade tensions intensify or external tariffs rise.
According to the report, measures to relax import restrictions and expand bank credit, coupled with easing financial conditions, have already strengthened activity in the industrial sector.
Further regulatory reforms to promote private sector participation could boost growth, formalise businesses, and generate employment over the medium term.
On a regional level, the GEP report finds that the global economy is proving more resilient than previously anticipated despite trade tensions and policy uncertainty.
Global growth is projected at 2.6 per cent in 2026, rising slightly to 2.7 per cent in 2027, an upward revision from mid-year forecasts.
Nonetheless, the World Bank warns that the 2020s are shaping up to be the weakest decade for global growth since the 1960s.
The report also notes that developing economies, including Pakistan, continue to face challenges in narrowing the gap in per capita income compared to advanced economies.
In 2025, while most advanced economies had passed pre-pandemic per capita income levels, approximately one in four developing economies remained below their 2019 levels.
The World Bank stated that global inflation is expected to ease slightly in 2026, supported by softer food prices and more stable energy markets.
The growth is anticipated to pick up in 2027 as trade flows adjust and policy uncertainty diminishes.
