Renowned economists have expressed doubts over Pakistan achieving the International Monetary Fund’s projected 3.2% GDP growth for fiscal year 2025-26, citing ongoing weaknesses in exports, low investment, and structural constraints in the economy. Instead, they suggest that growth is likely to remain in the range of 2.5–3%, assuming no major domestic or external shocks disrupt macroeconomic stability.
Former finance ministry adviser Khaqan Najeeb told Business Recorder that the IMF’s growth projection, while ambitious, could be within reach under favorable conditions. He noted that sharply lower inflation, relatively stable external accounts, and gradually easing financial conditions might support a moderate recovery in the second half of the fiscal year. Najeeb projected that GDP growth could range between 3.0% and 3.75%, but stressed that weak exports, subdued investment, and structural bottlenecks would continue to limit the pace of recovery unless complemented by lower interest rates, improved energy affordability, and targeted reforms to boost competitiveness.
On the other hand, former finance minister Dr. Hafeez Pasha argued that a growth rate of around 3% is a more realistic outcome. He highlighted that the previous fiscal year’s growth had been heavily supported by unusually strong expansion in the power sector and public administration, driven by higher government spending and recruitment. Pasha questioned the sustainability of these sectoral gains and suggested that the government’s higher projections might be influenced by political pressures.
Former finance ministry adviser Ashfaque Hassan Khan projected an even more cautious scenario, estimating growth between 2.5% and 3%. He cited continued pressures on export-oriented industries, multi-decade low levels of capital investment, and stagnant agricultural output as key constraints. Khan also cautioned that while the National Accounts Committee reported 3.71% growth in the first quarter of FY26, the quarterly GDP framework remains fragile and susceptible to global economic shocks and trade tensions.
The IMF had recently revised Pakistan’s GDP forecast for FY26 downward to 3.2% from an earlier 3.6% projection in its October 2025 outlook, reflecting the challenges facing the economy. The Fund projects global growth of 3.3% in 2026 and 3.2% in 2027.
Official data from the State Bank of Pakistan supports concerns about slowing momentum. Foreign direct investment fell by 43% in H1 FY26 to $808 million from $1.43 billion a year earlier. Exports declined 8.7% to $15.18 billion during the same period, while imports rose 11.28% to $34.4 billion. December 2025 alone saw exports drop for the fifth consecutive month, falling 20.41% year-on-year to $2.32 billion, widening the trade deficit to $19.2 billion for H1 FY26.
Taken together, these indicators suggest that while Pakistan may maintain modest growth, structural challenges in exports, investment, and agriculture are likely to prevent the economy from reaching the IMF’s 3.2% target without targeted policy interventions.
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