The International Monetary Fund has revised Pakistan’s economic outlook after completing its third program review, projecting slower growth alongside higher inflation and increasing external pressures for the coming fiscal year.
Updated estimates shared by Topline Securities show Pakistan’s gross domestic product (GDP) growth for fiscal year 2026-27 has been reduced to 3.5 percent, down from the earlier forecast of 4.1 percent.
At the same time, inflation expectations have been revised upward. Consumer prices are now projected to rise 8.4 percent in FY27, compared with the previous estimate of 7 percent, signaling continued cost-of-living challenges.
External Pressures Increase
The IMF also adjusted its outlook for Pakistan’s external accounts. The current account deficit is now expected to reach 0.9 percent of GDP in FY27, more than double the earlier projection of 0.4 percent.
Foreign exchange reserve expectations were lowered as well. Reserves are now forecast to stand at $20.9 billion by the end of FY27, below the earlier estimate of $23.3 billion, reflecting ongoing pressures from imports, energy prices, and external financing needs.
Mixed Picture for Current Fiscal Year
For the ongoing fiscal year (FY26), the IMF slightly improved Pakistan’s growth outlook, raising GDP expansion estimates to 3.6 percent from 3.2 percent. However, inflation projections for the same period were also increased to 7.2 percent, indicating persistent price pressures despite stabilization efforts.
Fiscal Targets Stay Tight
Despite weaker growth expectations, Pakistan’s fiscal discipline targets remain unchanged under the IMF program. The country is still expected to achieve a primary budget surplus of 2 percent of GDP in FY27, while the FY26 surplus target remains at 1.6 percent.
Analysts at Topline Securities said the revised projections largely match their earlier assessment that rising global oil prices and external sector risks would weigh on economic momentum. Higher energy costs, they warned, could slow growth, keep inflation elevated, widen the external deficit, and limit reserve accumulation — forcing authorities to continue strict fiscal policies.
