ADB report boosts Pakistan’s economic outlook, forecasts growth despite challenges

ISLAMABAD: The Asian Development Bank (ADB) has revised its growth forecast for Pakistan’s economy, increasing its GDP growth projection for 2025 from 2.7 per cent to 3 per cent, citing strong economic momentum despite challenges.

The bank’s latest report, released today, points to a robust 5.7 per cent growth in the final quarter of the last fiscal year, marking a significant recovery in key sectors. ADB highlighted that the production of large industries has picked up pace, and a similar upward trend is expected to continue into the current fiscal year.

“Despite the unprecedented floods in June 2025, which posed significant challenges, the economic momentum has remained resilient,” said the ADB’s report. “This demonstrates the adaptability of Pakistan’s economy in the face of natural disasters.”

Key drivers of growth include an increase in private sector credit and consumption, with recovery in investment and industry continuing to take shape. The ADB also noted that Pakistan’s business environment is improving, helping to foster growth and strengthen the economy.

However, external demand remains weak, and trade uncertainty continues to pose risks to the country’s economic outlook. The ADB’s report suggests that Pakistan’s recovery is still dependent on overcoming these external challenges.

Looking ahead, the growth forecast for 2025-26 has also improved, with the ADB adding that while the country faces ongoing challenges, there are promising signs of economic stabilization and expansion.

“The favorable business environment and the recovery in key sectors are expected to drive continued growth,” the report concludes, signaling cautious optimism for Pakistan’s economic prospects in the coming years.