The International Monetary Fund (IMF) has revised down Pakistan’s GDP growth forecast for the fiscal year 2025 to 2.6 percent, a decrease from its earlier estimate of 3 percent made in January 2025. However, the outlook for 2026 remains more optimistic, with growth projected at 3.6 percent.

In its latest World Economic Outlook report titled “A Critical Juncture Amid Policy Shifts,” the IMF also lowered inflation expectations significantly. Inflation is now forecasted to drop sharply to 5.1 percent in FY2025 from a steep 23.4 percent in FY2024, before rising moderately to 7.7 percent in FY2026.

The report further projects a gradual decline in unemployment, with the rate expected to fall to 8 percent in 2025 from 8.3 percent in 2024, and further ease to 7.5 percent in 2026.

Pakistan’s current account deficit is forecast to narrow to -0.1 percent of GDP in 2025, improving from -0.5 percent in 2024, though a slight widening to -0.4 percent is expected in 2026.

Additionally, government net borrowing is projected to ease, decreasing to -5.6 percent of GDP in 2025 from -6.8 percent in 2024.