Floods expected to limit Pakistan’s GDP growth to 3.5–4% in FY26, says Finance Minister

Finance Minister Muhammad Aurangzeb said that the recent floods in Pakistan, which affected large areas of agricultural land, are likely to reduce the country’s economic growth this fiscal year.

In an interview with Bloomberg News on Thursday, Aurangzeb stated that initial assessments show significant damage to the rice and cotton sectors, with a more detailed evaluation expected in the coming months. He projected GDP growth to remain north of 3.5%, estimating a range of 3.5–4% for FY2025-26.

Aurangzeb noted the impact of climate change, saying, “The recent floods actually are a reflection of that,” highlighting the real-time challenges facing Pakistan.

The State Bank of Pakistan (SBP) warned on Thursday that flood-related losses in agriculture and post-flood infrastructure spending may widen trade and current account deficits, accelerate inflation, and limit economic growth to around 3.25% in FY2025-26.

The International Monetary Fund (IMF) projects Pakistan’s economy will grow between 3.25% and 3.5% despite the destructive monsoon rains.

Aurangzeb also informed Bloomberg that Pakistan plans to issue its first tranche of yuan-denominated Panda bonds by late November or early December. The $250 million issuance aims to diversify the country’s funding channels beyond US dollar, euro, and Islamic sukuk markets.