The Asian Development Bank (ADB) has raised its forecast for Pakistan’s economic growth in fiscal year 2025 to 2.7%, up from earlier projections. This revision reflects unexpectedly strong performance in the industrial and services sectors, even as agriculture faced declines. From July 1, 2024, through June 30, 2025, Pakistan’s economy is now estimated to have expanded below 3%, but showing clear signs of diversification and resilience.

Sectoral Insights: Industry & Services Lead

ADB notes that growth in manufacturing, construction, telecommunications, and financial services surpassed expectations, fueling the upward revision. These gains helped offset seasonal declines in agriculture particularly due to erratic monsoon patterns impacting major crops such as wheat and cotton.

Inflation Cooling and Outlook for FY26

In conjunction with the growth revision, ADB has lowered its inflation projection for FY2025. Falling food and non-food price pressures during the first eleven months pushed inflation into single digits. The outlook for FY2026 remains unchanged, signaling continued price stability and gradual economic stabilization.

Regional Context: Asia-Pacific Slowdown

While Pakistan’s growth forecast improved, ADB has trimmed growth expectations for the wider Asia-Pacific region to approximately 4.7% for FY2025, down from previous estimates. Trade disruptions, elevated tariffs, and weaker global demand pose ongoing headwinds for regional economies.

What This Means for Pakistan

  1. Policy Implications
    • Stronger industrial performance suggests room for targeted support in manufacturing and services.
    • Food and commodity price control measures seem effective in reducing inflationary pressures.
  2. Challenges Ahead
    • Agricultural volatility remains a vulnerability.
    • External uncertainties trade tension, climate risk could impact projected stability.
  3. Opportunities
    • Leverage stronger sectors to diversify economy and enhance job creation.
    • Manage inflation inertia to maintain consumer purchasing power.

Conclusion

Pakistan’s revised FY2025 growth forecast of 2.7% validates the effectiveness of recent structural reforms and economic stabilization efforts. Continued recovery in industry and services bodes well, while manageable inflation provides breathing room for policymakers. As global headwinds persist, maintaining this momentum will require strategic investment in resilient sectors and targeted buffer policies for high-risk areas.