ADB trims Pakistan's FY2027 growth outlook to 3.7%, raises inflation forecasts

ISLAMABAD: The Asian Development Bank (ADB) has revised down Pakistan’s economic growth forecast for FY2027 to 3.7 percent, citing higher energy costs and mounting pressure on workers’ remittances, while sharply raising inflation projections for both FY2026 and FY2027 due to rising food and fuel prices and spillover risks from the Middle East conflict. In its Asian Development Outlook (July 2026), the ADB said preliminary data show Pakistan’s economy expanded by 3.7 percent in FY2026, supported by strong performance in the industrial and services sectors alongside modest gains in agriculture. However, the Bank warned that the growth momentum is expected to remain constrained in FY2027 as elevated energy costs and weaker remittance inflows weigh on economic activity. READ MORE: Not materialised under CPEC: Govt negotiates with ADB for ML-1 project financing The ADB also revised Pakistan’s inflation forecast upward to 7.2 percent for FY2026, reflecting rising food and fuel prices. It further increased the FY2027 inflation forecast to 8.3 percent, warning that persistent adverse spillovers from the Middle East conflict are likely to keep price pressures elevated. The latest projections underscore the challenges facing Pakistan’s economy despite the ongoing recovery, with inflationary pressures and external risks expected to remain key concerns over the medium term.