ADB cuts Pakistan’s FY2027 growth forecast to 3.7%, raises inflation outlook

The Asian Development Bank (ADB) has lowered Pakistan’s economic growth forecast for FY2027 to 3.7% from 4.5% and raised its inflation projection, citing higher food and fuel costs caused by the Middle East conflict and disruptions in global energy markets.

In its Asian Development Outlook (ADO) released on Thursday, the ADB said Pakistan’s FY2027 growth outlook was revised downward due to higher energy costs and pressure on remittances. The government has set a 4% GDP growth target for the fiscal year.

The lender said preliminary data showed Pakistan’s economy grew 3.7% in FY2026, supported by the industrial and services sectors, along with modest growth in agriculture.

The ADB now expects Pakistan’s consumer price inflation to average 7.2% in FY2026 and 8.3% in FY2027, up from its previous forecast of 6.5% for next year. The government has projected inflation at 8.2% for FY2027.

The bank also cut its growth forecast for developing Asia and the Pacific to 4.9% in 2026 from 5.5% in 2025, while maintaining the 2027 forecast at 5.1%. Regional inflation is now projected at 4.3% in 2026, compared with 3% in 2025, while the 2027 forecast remains unchanged at 3.4%.

According to the ADB, the Middle East conflict has disrupted energy markets, pushing Brent crude prices from around $71 a barrel before the conflict escalated to nearly $144 in early April. Prices later eased below $80 after a framework agreement announced on June 14 and the resumption of shipping through the Strait of Hormuz.

The bank warned that higher energy prices, transport bottlenecks and rising fertiliser costs could continue to disrupt supply chains and keep inflationary pressures elevated, as the impact of higher fuel costs typically takes several months to pass through to consumer prices.