IMF Revises Pakistan’s GDP Growth Estimate to 3% for Current Fiscal Year
ISLAMABAD:The International Monetary Fund (IMF) has downgraded Pakistan’s GDP growth forecast for the current fiscal year to 3%, down from its previous estimate of 3.2%. This revision was made ahead of planned discussions on Pakistan’s $7 billion Extended Fund Facility (EFF), which is scheduled for next month.
In the World Economic Outlook Update released on Friday, the IMF maintained its growth projection of 4% for the next fiscal year (FY2026). However, it lowered the 2025 forecast for Pakistan’s economy by 0.2 percentage points for the current year. While the IMF did not provide specific reasons for the downgrade, a reduction in cotton output and weak industrial performance were likely contributing factors, both of which are impacting the country’s revenue generation.
The global growth outlook remained unchanged, with the IMF maintaining its 3.3% projection for both the current year and the next. However, there were notable divergences in growth trends across different regions. The United States, for example, saw an improved growth forecast, rising by 0.5 percentage points to 2.7%, due to stronger-than-expected domestic demand.
On the other hand, growth in the euro area is expected to remain modest, with a slight increase to 1% from the previous year, largely influenced by geopolitical tensions. The region is also facing economic challenges such as weak manufacturing performance, low consumer confidence, and higher energy prices compared to the US.
Among other advanced economies, a mix of positive and negative factors is keeping growth forecasts relatively stable. While recovering real incomes are expected to support consumption, increased trade policy uncertainty could dampen investment.
For emerging markets and developing economies, the IMF projected that growth in 2025-26 would largely align with expectations for 2024. China’s growth forecast for 2025 was slightly revised upwards by 0.1 percentage points to 4.6%, reflecting fiscal measures and the offsetting effects of trade policy uncertainty. India’s growth is expected to remain solid at 6.5%.
The Middle East and Central Asia region showed a downward revision in growth projections for 2025, particularly in Saudi Arabia, due to extended OPEC+ production cuts.
World trade volumes for 2025 and 2026 were also slightly downgraded, reflecting an increase in trade policy uncertainty, which is expected to disproportionately affect investment in trade-intensive sectors.
The IMF flagged several risks to the global economic outlook. In the medium term, global growth is expected to be lower than its 2025-26 average. Near-term risks vary by region, with the US facing upside risks while many other economies face challenges, particularly from energy-related issues in Europe and real estate problems in China. The IMF also cautioned that a rise in protectionist trade policies could further disrupt global trade, reduce market efficiency, and lead to supply chain disruptions.
