The United Nations Economic and Social Commission for Asia and the Pacific UN ESCAP has projected Pakistan’s economic growth at 2.6 percent for fiscal year 2025–26 and 3.1 percent for FY27. The report highlights gradual recovery trends while also noting structural challenges that continue to affect long-term economic stability and inclusive development in the country.
At a policy discussion event organised by the Sustainable Development Policy Institute, Pakistan’s Economic Adviser Hassan Mohsin questioned the projections and said early indicators suggest stronger domestic performance. He noted that GDP growth in the first half of FY26 reached 3.9 percent, supported by a rebound in large-scale manufacturing activity across key industrial sectors.
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Moreover, ESCAP reported that Pakistan secured a staff-level agreement with the International Monetary Fund for a 1.2 billion dollar disbursement under the Extended Fund Facility and Resilience and Sustainability Facility. This funding is aimed at supporting macroeconomic stabilisation while also strengthening climate resilience efforts in vulnerable regions.
Additionally, the report stated that total IMF disbursements to Pakistan will rise to approximately 3.3 billion dollars after the latest tranche. Analysts noted that continued external support remains important for stabilising foreign exchange reserves and managing fiscal pressures amid ongoing structural reforms in the economy.
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Furthermore, ESCAP highlighted that inflation in Pakistan dropped significantly from 23.8 percent in 2024 to 4.6 percent in 2025 due to tighter monetary policy, fiscal consolidation, and improved agricultural output. However, the report warned that recent floods in June 2025 caused renewed inflationary pressures by damaging crops, infrastructure, and housing across several regions.
In addition, ESCAP cautioned that Pakistan’s reliance on indirect taxation and reduced public investment could disproportionately impact lower-income groups and vulnerable workers. The report also noted that long-term borrowing costs remain elevated at around 12 percent, while highlighting positive developments such as a solar energy programme in Sindh benefiting nearly 1.5 million people through expanded electricity access.