The International Monetary Fund (IMF) has projected Pakistan’s average consumer price inflation to increase to 9.9% in fiscal year 2026-27, while real gross domestic product (GDP) growth is expected to reach 3.5%, according to the World Economic Outlook released on October 13, 2026. The latest projections indicate renewed inflationary pressure alongside a slight moderation in economic growth compared with the previous fiscal year. The IMF estimated average inflation at 7.1% for FY2025-26 and 4.5% for FY2024-25, while economic growth is projected to decline from 3.6% in FY26 to 3.5% in FY27. The outlook places price stability and sustained economic expansion among Pakistan’s key economic challenges as domestic price indicators and international developments continue to influence the country’s financial conditions.
Recent inflation figures indicate that price pressures remain elevated. Pakistan’s national Consumer Price Index (CPI) recorded year-on-year inflation of 10.3% in September 2026, easing from 11.1% in August but remaining significantly higher than the 5.8% recorded in September 2025. Average inflation during the first three months of FY2026-27 reached 10.2%, compared with 4.3% in the corresponding period of the previous fiscal year. The increase in the quarterly average reflects the difference between current price trends and the relatively lower inflation recorded a year earlier. Although the September reading showed some moderation from the previous month, the figures indicate that households and businesses continue to operate in an environment of elevated price growth, with implications for purchasing power, operating costs and economic planning.
Wholesale and sensitive price indicators also showed differing movements during September. The Wholesale Price Index (WPI) rose 13.3% year-on-year, up from 11.8% in August, indicating stronger price increases at the wholesale level. Meanwhile, the Sensitive Price Indicator (SPI), which tracks changes in the prices of selected essential consumer items, increased 8.4% year-on-year, easing from 9.5% in the preceding month. The divergence between these indicators suggests that price movements vary across different stages of the supply chain and categories of goods. Rising wholesale prices can add to cost pressures for businesses, while changes in essential commodity prices directly affect household budgets. The latest figures therefore provide additional context for the IMF’s projection that average inflation will rise during FY27.
In its staff-level agreement covering Pakistan’s Extended Fund Facility (EFF), the IMF noted that headline inflation had peaked in May before cooling to approximately 10.3% in September, while core inflation remained contained. The assessment provides further context for the country’s inflation trajectory under the ongoing IMF-supported programme. However, the World Economic Outlook identifies several external risks that could complicate the outlook, including geopolitical tensions, volatile energy prices, tighter global financial conditions and disruptions to international trade. These factors can affect import costs, supply chains and financing conditions, potentially placing additional pressure on economies that depend on imported energy and internationally traded goods. For Pakistan, the impact of these developments will be relevant to inflation management and the broader economic outlook.
The IMF also expects Pakistan’s external position to weaken over the forecast period. The country’s current account balance, estimated at a surplus equivalent to 0.5% of GDP in FY2024-25, is projected to move to balance in FY2025-26 before recording a deficit of 1.0% of GDP in FY2026-27. A shift towards a current account deficit would indicate that the country’s external receipts are expected to fall short of payments over the relevant period, although the actual outcome will depend on developments in exports, imports, remittances and other cross-border transactions. The report also projects an improvement in the unemployment rate, from 7.1% in FY25 to 6.9% in FY26 and 6.5% in FY27. These projections suggest that employment conditions could improve even as inflation rises and the current account position comes under pressure.
Pakistan is grouped among the oil-importing economies of the Middle East and Central Asia in the IMF’s regional assessment. For this group, inflation is projected at 9.4% in 2026 and 11.0% in 2027. Regional output is expected to contract by 0.3% in 2026 before rebounding by 6.3% in 2027, based on the report’s assumption that the Strait of Hormuz reopens in March 2027. The assumption is significant because the strait is an important route for international energy shipments, and disruptions can affect oil supplies, prices and transportation costs. The regional projections highlight the sensitivity of economic performance to geopolitical developments and energy market conditions, particularly for countries that rely heavily on imported oil and gas.
The IMF’s South Asian projections show different growth and inflation trajectories among major economies. India is projected to record economic growth of 7.0% in both 2026 and 2027. Bangladesh’s growth is forecast at 3.6% in 2026 and 3.2% in 2027, while its inflation rate is projected at 8.7% and 10.9%, respectively. These estimates provide a regional comparison for Pakistan’s expected growth of 3.5% and average inflation of 9.9% in FY27, although the country-specific fiscal-year projections and calendar-year estimates are based on different reporting periods. The figures illustrate variations in the economic outlook across South Asia as countries face different domestic conditions and external pressures.
At the global level, the IMF projects economic growth of 3.1% in 2026, followed by an increase to 3.4% in 2027. Global headline inflation is expected to reach 4.7% in 2026 before easing to 4.1% in 2027. The report also assumes that average oil prices will reach $95.74 per barrel in 2026 and decline to $87.39 in 2027, compared with $67.74 in 2025. These oil price assumptions are particularly relevant for countries that depend on imported energy, as higher international prices can increase import bills and feed into domestic transportation, electricity and production costs. The projected easing in oil prices in 2027 could moderate some external pressures, but the outlook remains exposed to geopolitical developments and potential supply disruptions.
The IMF’s latest projections present a mixed outlook for Pakistan, combining expected economic growth of 3.5% with a rise in average inflation to 9.9% during FY2026-27. The projected deterioration in the current account balance adds another consideration for policymakers, while the expected decline in unemployment points to a possible improvement in labour market conditions. Domestic inflation trends, international energy prices, trade disruptions and global financial conditions will remain important factors influencing the economic trajectory. The forecasts represent the IMF’s assessment based on the assumptions available at the time of publication, and actual results may differ as domestic and international conditions change. Pakistan’s ability to manage price pressures while sustaining growth and maintaining external stability will remain central to its economic outlook for the coming fiscal year.
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