Key Takeaways
- IMF projects Pakistan’s economic growth at 3.5% for FY27.
- Headline inflation is projected to rise to 9.9%.
- Current account deficit is expected to widen to 1% of GDP.
The International Monetary Fund (IMF) has projected Pakistan’s economic growth at 3.5% for the current fiscal year (FY27), according to its latest World Economic Outlook. This projection is significantly lower than the government’s target of 4% and the World Bank’s forecast of 3.8%.
Inflation is expected to remain close to double digits, with a projected headline inflation rate of 9.9%, up from 7.1% last year. The fund also estimated a current account deficit to widen to 1% of GDP from a surplus of 0.5% in FY2025.
Despite these challenges, the IMF noted that global economic activity has remained resilient, rebounding to 3.4% in 2027 after a projected growth of 3.1% in 2026. The fund attributed this resilience to the technology upturn, buffers, and adaptations that mitigated the damage from geopolitical disruptions.
Unemployment is projected to decline to 6.5% this year, compared to 6.9% last year and 7.1% in the previous year. However, the IMF did not explain the projected decline in unemployment despite the rising population and other economic forecasts.
The IMF’s growth projections are slightly lower than the 3.6% recorded last year but higher than the 3.2% in FY2025. The fund warned that energy-importing economies like Pakistan, which have limited links to the technology value chain, face the most difficult outlook.
The margins of adjustment that have helped sustain resilience are not limitless, and risks are skewed to the downside. Further escalation in conflicts, a reassessment of expectations surrounding artificial intelligence (AI), renewed trade tensions, and fiscal vulnerabilities could weaken growth. On the upside, stronger momentum in AI investment and productivity gains from AI could provide a boost.
The fund’s review of Pakistan’s economic situation concluded last week, but it did not provide a detailed explanation for the projected decline in unemployment. The IMF’s projections are based on the assumption that global economic activity will remain resilient despite multiple challenges.
Pakistan’s economic situation is closely monitored by international financial institutions, and the country’s policymakers will need to navigate these challenges to ensure sustainable growth and stability.
