According to the latest economic report of the World Bank, Pakistan’s economy grew at a rate of 3.7 percent in the fiscal year 2025-26, while the rate was 3.2 percent in the previous fiscal year.
According to the report, economic stabilization measures and prudent fiscal policy helped in the growth. However, rising inflation and high energy prices have created new challenges for the economy.
According to the World Bank, 2.9 percent growth was recorded in the agriculture sector and 4.1 percent in the services sector. The services sector played a key role in overall economic growth.
The report said that the improvement in Pakistan’s credit rating by S&P and Moody’s and the return to global financial markets showed signs of improving investor confidence.
Some improvement was also seen in the fiscal situation. According to the World Bank, the overall fiscal deficit narrowed to 2.6 percent of GDP, while foreign exchange reserves also improved.
On the other hand, average headline inflation in the fiscal year 2025-26 was 7.1 percent. Due to pressure from rising energy prices, the State Bank increased the policy rate to 11.5 percent in April 2026.
The World Bank has forecast Pakistan’s economic growth rate to be 3.8 percent for the fiscal year 2026-27. Inflation is likely to increase to 8.2 percent during the same period.
According to the report, conflict in the Middle East, high energy prices and climate risks are major concerns for economic stability. In these circumstances, economic reforms, job opportunities and productivity growth will be important for sustainable development.
