Pakistan’s economic growth is projected to reach 3.5 per cent in fiscal year 2026-27, while inflation is expected to rise to 9.9 per cent, according to the International Monetary Fund (IMF). The projections indicate continued economic pressure despite expectations of a gradual recovery in global economic activity.
In its latest World Economic Outlook, released during the World Bank-IMF annual meetings in Bangkok, the IMF forecast Pakistan’s growth below the government’s 4 per cent target. The projection is also lower than the World Bank’s 3.8 per cent forecast announced last month. Pakistan recorded growth of 3.6 per cent in the previous fiscal year, compared with 3.2 per cent in FY2025.
The IMF expects Pakistan’s headline inflation to increase from 7.1 per cent last year to 9.9 per cent in the current fiscal year. The fund also projects the country’s current account to shift from a surplus of 0.5 per cent of gross domestic product in FY2025 to a deficit of 1 per cent. However, unemployment is forecast to decline from 6.9 per cent to 6.5 per cent.
The global economy remains resilient, but that resilience is becoming more fragile and more uneven. Growth is projected at 3.1% in 2026 and 3.4% in 2027, while inflation is expected to reach 4.7%, driven largely by higher energy and food prices. Read the IMF’s latest analysis: https://t.co/yoil3EB47M
— IMF (@IMFNews) October 13, 2026
The report warns that Pakistan faces challenges because of its dependence on imported energy and limited participation in technology-related supply chains. Higher energy costs could put pressure on household incomes, government finances and the country’s external payments. A prolonged conflict in the Middle East could further affect Pakistan through energy imports, remittances and regional financial support.
Globally, the IMF expects economic growth to slow to 3.1 per cent in 2026 before recovering to 3.4 per cent in 2027. Global inflation is projected to reach 4.7 per cent in 2026 and ease to 4.1 per cent the following year. The fund attributed economic resilience partly to technological investment, particularly developments linked to artificial intelligence.
The IMF cautioned that escalating conflicts, renewed trade tensions, financial vulnerabilities and weaker-than-expected returns from artificial intelligence investment could undermine global growth. It advised governments to strengthen public finances through revenue measures and use temporary, targeted income support to protect vulnerable households during cost-of-living pressures.
Finance Minister Muhammad Aurangzeb recently told Reuters that the government expected economic growth to exceed 4 per cent during FY27 despite elevated oil prices. He also said Pakistan planned to privatise five to six state-owned entities during the year, potentially generating more than $1 billion. The difference between the government’s expectation and the IMF forecast highlights uncertainty surrounding Pakistan’s economic outlook.
