The Asian Development Bank (ADB) has increased Pakistan’s growth forecast to 3.0% for the fiscal year 2024-25, up from 2.8% projected in September 2024.
The revision comes as the country experiences improved macroeconomic stability following the approval of the new International Monetary Fund (IMF) program under the Extended Fund Facility in September.
The ADB report highlights that industrial output is expected to improve with the easing of import restrictions, higher investor confidence, and better access to foreign exchange. A more flexible monetary policy, supported by lower inflationary pressures, is also likely to encourage private investment and economic activity.
However, the report notes that agriculture growth may weaken due to heavy rains and flood-like conditions during the monsoon season. Wheat and cotton, two key crops, are expected to perform poorly in FY2025.
For FY2024, the ADB has revised Pakistan’s growth forecast upward to 2.5%, aligning with updated official estimates.
In South Asia, growth forecasts have been reduced to 5.9% for 2024 and 6.3% for 2025, mainly due to slower-than-expected growth in India’s manufacturing sector and lower government spending.
While forecasts for Pakistan and Sri Lanka were raised, Bangladesh and Maldives saw reductions due to political unrest and fiscal adjustments. Nepal is also expected to experience slightly lower growth in 2025.
For developing Asia, growth forecasts have been adjusted to 4.9% for 2024 and 4.8% for 2025. Changes in East Asia and South Asia growth projections have offset stronger growth in the Caucasus, Central Asia, and Southeast Asia.
The report notes that domestic demand and exports remain steady, but growth momentum has slowed.
The report also highlights potential risks, including changes in U.S. policies under the incoming Trump administration, geopolitical tensions, and challenges in China’s property market. These factors could have long-term implications beyond the forecast period.
