Pakistan's economic forecast shows modest growth with real GDP expected to rise by 2.7 percent for the current fiscal year ending June 2025, a slight improvement from last year's 2.5 percent. The World Bank’s latest report, "Pakistan Development Update: Reimagining a Digital Pakistan," outlines that this growth will be spearheaded by increased private consumption and investment, supported by easing inflation, lower interest rates, and a resurgence in business confidence.
The economic overview presents a stabilization scenario with current account and primary fiscal surpluses, despite weak growth in the first half of the fiscal year. Agriculture has been hampered by adverse weather and pest infestations, while industrial activity suffered due to rising input costs and taxes, and reduced government spending. Growth in the services sector also remained subdued.
"Pakistan’s key challenge is to transform recent gains from stabilization into economic growth that is sustainable and adequate for poverty reduction," said Najy Benhassine, World Bank Country Director for Pakistan. Reforms prioritizing efficient and progressive tax systems, market-driven exchange rates, and reduced import tariffs are suggested to attract investment.
Looking ahead, GDP projections for fiscal years 2026 and 2027 stand at 3.1 percent and 3.4 percent, respectively, although these figures remain under the shadow of continued tight monetary and fiscal policies and other significant risks.
"Pakistan’s economy has turned the corner and stabilized. Yet, the economic outlook remains fragile," commented Anna Twum, lead author of the report. The report stresses the necessity of structural reforms to enhance Pakistan’s digital economy infrastructure and close the existing digital divide. Challenges in digital accessibility due to varied connectivity quality and high costs of fixed broadband are noted.
"Closing the digital divide and expanding access to digital services require targeted legal and regulatory reforms," stated Shahbaz Khan, co-author of the report. Such reforms would enhance Pakistan’s digital ecosystem, alongside increased private investment and improved cooperation between federal and provincial authorities.
This World Bank report, alongside the South Asia Development Update series, projects a regional growth slowdown to 5.8 percent in 2025, slightly below prior forecasts, amid a complex and uncertain global economic environment. The series additionally assesses tax policy inefficiencies across the region. Despite relatively high tax rates, revenues remain below average for developing economies, posing a challenge for fiscal resilience.