The Asian Development Bank (ADB) has revised Pakistan’s economic growth forecast for the current fiscal year, citing a less severe-than-expected impact from recent floods, increased public investment, and stabilizing inflation. The Manila-based development lender also upgraded its growth outlook for the South Asian region in its Asian Development Outlook December 2025 report.
While the ADB did not specify the exact growth projection for Pakistan, it noted that the Government of Pakistan had updated its GDP growth estimate for FY25 to 3%, up from the earlier 2.7%. The report highlighted strong economic performance in Q4FY25, with the economy growing 5.7%, and robust expansion in large-scale manufacturing in early FY26.
Pakistan’s inflation for the first four months of FY26 (July–October) stood at 4.7%, down from 8.7% during the same period last year. The bank observed that after an initial spike following June’s floods, prices of key food items have begun to stabilize, contributing to a more favorable economic outlook.
Regionally, the ADB forecasts strong growth across South Asia, raising the 2025 projection to 6.5% from 5.9%, while keeping the 2026 forecast steady at 6%. India’s FY25 growth estimate was revised upward to 7.2% from 6.5%, supported by stronger domestic consumption and faster-than-expected GDP expansion, while Sri Lanka’s forecasts were also raised due to robust credit growth, increased consumer spending, and improved investor confidence. In contrast, Bangladesh’s FY26 growth projection was lowered because of weaker exports and supply disruptions.
The report also cited risks to the regional economic outlook, including potential trade tensions, financial market volatility, geopolitical pressures, and a possible slowdown in China’s property market. China’s growth forecast for 2025 was slightly increased to 4.8%, with the 2026 projection maintained at 4.3%. Southeast Asia’s 2025 growth estimate was revised upward to 4.5%, reflecting strong performance in Indonesia, Malaysia, Singapore, and Vietnam.
Overall, the ADB’s outlook underscores Pakistan’s resilience amid natural disasters and inflationary pressures, highlighting the positive impact of public investment and structural recovery in driving economic momentum. The revised forecasts suggest that the country is regaining stability, with key sectors such as manufacturing showing significant growth potential, reinforcing confidence among investors and policymakers in the region.
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