The International Monetary Fund (IMF) expects Pakistan’s economy to grow by 3.5 per cent in fiscal year 2026-27, suggesting the country may fall short of the federal government’s 4pc growth target despite a gradual improvement in economic activity.

In its latest World Economic Outlook Update released on Wednesday, the Fund kept its growth forecast for FY2025-26 unchanged at 3.6pc. The projections are the same as those published in the IMF’s April 2026 World Economic Outlook.

According to the report, Pakistan’s economy grew by 3.2pc in 2025 and is projected to expand by 3.6pc in 2026 before easing slightly to 3.5pc in 2027.

The IMF also presented its latest global economic outlook, forecasting world growth at 3.0pc in 2026 and 3.4pc in 2027. These estimates are largely unchanged from its April assessment.

It said the global outlook remains uneven across regions, with ongoing conflict weighing on energy-importing and vulnerable economies, while rising demand driven by artificial intelligence is supporting growth in countries linked to the global technology supply chain.

The Fund added that global disinflation has stalled, though risks are now more balanced than in April. It warned that renewed geopolitical tensions and financial market repricing could still weigh on the outlook, urging policymakers to maintain price stability, rebuild fiscal buffers and strengthen economic resilience.