The International Monetary Fund (IMF) has revised Pakistan’s GDP growth projection for the fiscal year 2026–27 downward to 3.5 percent. This adjustment reflects increasing global uncertainty stemming from escalating tensions in the Middle East and the ongoing conflict involving Iran.
In its latest World Economic Outlook report, the IMF highlighted that the conflict is disrupting global economic expansion and slowing the pace of disinflation. Emerging markets, including Pakistan, are expected to bear the brunt of these pressures.
Specifically, Pakistan’s economy is now forecasted to grow by 3.5 percent in the upcoming fiscal year, a reduction from previous estimates. Meanwhile, inflation in Pakistan is anticipated to rise to 8.4 percent during the same period, driven largely by spillover effects from elevated global energy prices.
The IMF emphasized Pakistan’s vulnerability to Middle Eastern developments due to its significant dependence on energy imports from the region. Disruptions in oil and commodity markets linked to the conflict are contributing to inflationary pressures worldwide.
For the current fiscal year, the IMF has maintained its growth forecast for Pakistan at 3.6 percent. However, the global lender has downgraded its broader economic outlook, warning that prolonged instability in the Middle East could further dampen global growth, exacerbate inflation, and strain fiscal balances in developing countries.
Officials cautioned that ongoing risks include energy price shocks and supply chain interruptions, with the overall economic outlook heavily contingent on the duration of geopolitical tensions in the region.
