ADB Projects Pakistan's FY2027 Growth at 3.7% as Sustained Reforms, Stronger External Buffers Support Economic Outlook
Pakistan’s economic performance continued to strengthen in fiscal year 2026 (FY2026, ended 30 June 2026), with growth accelerating to 3.7% from 3.2% in FY2025, according to a report by the Asian Development Bank (ADB) published on Wednesday. This expansion was broad-based and supported by:
- Resilient services sector
- A rebound in manufacturing
- Recovery in agriculture
- Stronger private investment
However, the middle East conflict slowed economic activity in the final quarter of the fiscal year.
The ADB projects Pakistan’s gross domestic product (GDP) growth to remain at 3.7% in FY2027. This is expected to be supported by:
- Sustained implementation of economic reforms
- Improved external buffers
- Renewed access to international capital markets
- Recent sovereign credit rating upgrades
Despite these positives, elevated energy prices and continued external uncertainty, including the lingering effects of the Middle East conflict, are anticipated to limit further growth acceleration.
"Pakistan's economy has made progress in strengthening macroeconomic stability over the past two years," said ADB Country Director for Pakistan, Emma Fan. "Maintaining reform momentum will be critical to unlock higher private investment, strengthen resilience to external shocks, and achieve stronger and more inclusive growth."
Key highlights from FY2026:
- Growth driven by manufacturing and services sectors
- Agriculture grew 2.9%, despite flood-related losses
- Private investment increased 8.6% due to lower borrowing costs and improved business confidence
- Fiscal consolidation continued, with gross international reserves increasing for external resilience
- Pakistan’s sovereign credit ratings were upgraded by S&P in July 2026 and Moody’s in August 2026
- Access to international capital markets regained through Eurobond and Panda bond issuances in April and May 2026
- Average inflation 7.1% in FY2026, rising to 8.3% projected for FY2027, exceeding the central bank’s medium-term target range of 5%–7%