Economists doubt Pakistan will meet IMF’s 3.2% growth target this year

Pakistan is unlikely to achieve the International Monetary Fund’s projected 3.2% GDP growth for the current fiscal year, as exports and investment continue to weaken, renowned economists said, adding that growth is more likely to remain in the 2.5–3% range, assuming macroeconomic stability holds and no major domestic or external shocks emerge.

Talking to Business Recorder, Former finance ministry adviser Khaqan Najeeb said the IMF’s growth projection appears achievable. He said sharply lower inflation, relatively stable external accounts and gradually easing financial conditions could support a moderate recovery in the second half of the year.

He said GDP growth could fall in the 3.0–3.75% range, though weak exports, subdued investment and structural constraints would continue to limit the pace of recovery unless supported by lower interest rates, improved energy affordability and targeted competitiveness reforms.

Former finance minister Hafeez Pasha, however, said GDP growth of around 3% would be a more realistic outcome, noting that reported growth in the previous fiscal year was driven by unusually strong expansion in the power sector and public administration, reflecting higher public spending and government hiring. He said the government appeared under pressure to project higher growth, questioning the sustainability of recent sectoral performance. 

Former finance ministry adviser Ashfaque Hassan Khan also projected growth between 2.5% and 3%, citing weak exports, low investment and stagnant agriculture. He said export-oriented industries remain under pressure, capital investment is at multi-decade lows and no clear turnaround is visible in agriculture.

Khan noted that while the National Accounts Committee estimated 3.71% growth in the first quarter of the current fiscal year, the quarterly GDP framework remains fragile. He also warned that global economic projections could be revised downward amid rising trade and tariff tensions.

The International Monetary Fund recently lowered Pakistan’s GDP growth forecast to 3.2% from 3.6% projected in its October 2025 outlook. The Fund has projected global growth of 3.3% in 2026 and 3.2% in 2027.

According to the State Bank of Pakistan, foreign direct investment fell 43% in the first half of fiscal year 2026 to $808 million from $1.43 billion a year earlier. Exports declined 8.7% to $15.18 billion during the same period, while imports rose 11.28% to $34.4 billion.

Exports fell for the fifth consecutive month in December, dropping 20.41% year-on-year to $2.32 billion, widening the trade deficit to $19.20 billion in the first half of the fiscal year.