Pakistan’s GDP growth is forecasted to remain at 3% for fiscal year 2025–26, with a recovery in agricultural production and reconstruction efforts following the 2025 floods expected to drive growth to 3.4% in the following fiscal year, according to the World Bank’s latest Global Economic Prospects report.
However, the World Bank has warned that Pakistan’s current account deficit is expected to widen in fiscal year 2026–27 due to rising import demand and a post-flood normalization of remittance inflows alongside the strengthening growth.
The report highlights concerns over trade-related shocks, particularly for oil-importing countries like Pakistan and Tunisia. It notes that further increases in US tariffs could negatively impact exports, especially for economies with concentrated export destinations.
Despite these challenges, the report states that deeper regulatory reforms to encourage private sector activity in countries like Pakistan and Morocco could stimulate growth, reduce informality, and create jobs. In Pakistan, easing import restrictions and expanding bank credit, partly due to relaxed financial conditions, have helped strengthen industrial sector activity.
The World Bank also noted improvements in current account balances in oil-importing countries, including Pakistan, driven by increased remittances and tourism revenues. Furthermore, inflation has declined in these economies, partly due to lower food prices, resulting in multiple policy rate cuts. However, inflationary pressures persist in some regions, prompting continued restrictive monetary policies.
Globally, the World Bank revised its growth projections, predicting global growth will remain steady, easing to 2.6% in 2026 before rising to 2.7% in 2027. The resilience in growth, particularly in the United States, has helped offset global trade disruptions and policy uncertainty. Despite this, the 2020s are set to be the weakest decade for global growth since the 1960s, widening the gap in living standards between advanced and developing economies.
The report also highlights that global inflation is expected to decrease to 2.6% in 2026, largely due to softer labor markets and lower energy prices, with a rebound in growth expected in 2027 as trade flows stabilize and policy uncertainty decreases.
