ISLAMABAD: Pakistan’s economy is showing signs of stability and recovery with growth projected for FY2025 (ending 30 June 2026), as the impact of tight macroeconomic policies and ongoing reforms begin to take effect.
According to the Asian Development Outlook (ADO) April 2025, the Asian Development Bank’s (ADB) annual flagship economic publication, Pakistan’s real GDP is expected to grow by 2.5% in FY2025, maintaining the same growth rate from FY2024.
The growth outlook is supported by a more stable macroeconomic environment, aided by the International Monetary Fund (IMF) Extended Fund Facility (EFF) arrangement that began in October 2024. Adherence to this economic adjustment program is crucial for building resilience and ensuring sustainable and inclusive growth.
The ADB notes that the country’s economic recovery has benefited from improved macroeconomic stability, driven by reforms in areas like tax policy and energy sector viability. Growth in FY2025 is expected to be driven by a rebound in private sector investment, boosted by perceptions of greater economic stability, progress on reforms, and a stable foreign exchange market.
Economic activity in both the industrial and services sectors is expected to benefit from recent monetary easing and macroeconomic stability. Additionally, strong remittance inflows, lower inflation, and monetary easing are likely to support aggregate demand. Average inflation is projected to decline significantly to 6.0% in FY2025, with a further drop to 5.8% in FY2026.
There is also potential for greater female labor force participation, which could enhance productivity and economic output. Investment in girls’ education, vocational training programs, and improvements in public transport and safety could help reduce barriers to women entering the workforce.
The ADB's growth forecasts were finalized before the 2 April announcement of new tariffs by the US administration, which may affect growth projections.
