The International Monetary Fund (IMF) has warned that recent floods could seriously hurt Pakistan’s economy. Growth may slow, inflation may rise, and the current account deficit could widen. These effects follow major flooding during the third quarter of 2025. The IMF shared its findings in its latest Regional Economic Outlook report for the Middle East and Central Asia.
According to the report, Pakistan’s GDP growth may fall to 3.6% this fiscal year. This is below the government’s target of 4.2%. The IMF blamed the decline on heavy flood damage to agriculture, roads, and homes. These losses will likely reduce income and drive up prices. The report noted that the full impact of the floods is still uncertain.
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The IMF also warned that inflation could rise again in the coming months. It pointed to several reasons: the end of electricity subsidies, tariff increases, and supply issues caused by the floods. Food and energy prices are expected to be hit the hardest. Pakistan had recently reduced inflation through tight monetary policy, but this progress is now at risk.
Despite the economic challenges, the IMF praised Pakistan’s reform efforts. It said that continued policy reforms could improve long-term stability. The Fund projected that, if reforms continue, growth could reach 4.5% by 2030. However, that depends on strong policy action and political will.
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The IMF concluded that Pakistan must stay focused on economic reform. Fiscal discipline, better planning, and climate resilience are key to future stability. The report urged Pakistan to continue building economic strength while managing climate-related shocks.