The International Monetary Fund (IMF) has reduced Pakistan’s GDP growth forecast for FY2024–25 to 2.6%, down from its earlier projection of 3.2% made in October 2023. The revision reflects weak crop yields, sluggish industrial activity in the first half, and ongoing global economic uncertainty.
In its latest review under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), the IMF noted that GDP growth was limited to 1.3% in Q1 and 1.7% in Q2 of FY2024, primarily due to poor Kharif crop performance and subdued manufacturing output.
Government spending for FY2025 remains at 18.9% of GDP, in line with program targets, and is expected to fall to 17.8% in FY2026. Meanwhile, the Public Sector Development Program (PSDP) has been increased from 2.3% to 2.5% of GDP, although the IMF expressed concern over slow fund disbursement by the Planning Ministry.
No revenue is expected from privatisation efforts in FY2024 or for the next four years.
Inflation dropped to 0.7% year-on-year in March 2025, supported by tight monetary policies and declining food and energy costs. However, core inflation remains high at around 9%. While overall inflation for FY2025 has been revised downward, a temporary increase is anticipated before it stabilizes between 5–7% in FY2026.
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The current account deficit (CAD) is projected at $0.2 billion (0.1% of GDP) for FY2025, aided by stable exports and growing remittances in a relatively stable foreign exchange environment. Over the medium term, the CAD is expected to rise to 1% of GDP as import demand recovers.
Gross international reserves are forecasted to improve due to multilateral and bilateral inflows, including $1.3 billion in RSF disbursements. However, Pakistan’s access to commercial financing remains constrained, with only a small Panda bond planned for FY2026 and a gradual return to international markets anticipated in FY2027.
Export projections for FY2025 have been revised down slightly to $31.305 billion (from $31.751 billion), while imports are now estimated at $57.634 billion, up from the earlier forecast of $57.180 billion.
