The International Monetary Fund (IMF) has downgraded Pakistan’s GDP growth projection for 2025 to 3%. The previous forecast, made three months ago, projected a growth rate of 3.2%.
The revision was part of the IMF’s “World Economic Outlook Update.” The report focused on global growth trends and uncertainties. The IMF did not specify reasons for Pakistan’s downgraded forecast.
Despite the reduction, Pakistan’s GDP growth is projected to reach 4% in 2026. The IMF’s latest forecast aligns with the Asian Development Bank (ADB), which recently adjusted Pakistan’s 2024-25 growth to 3%, up from 2.8%.
Both institutions have noted Pakistan’s economic challenges while maintaining a cautiously optimistic medium-term outlook.
Global Growth Projections
The IMF predicts global GDP growth will remain steady at 3.3% for both 2025 and 2026. This is slightly below the historical average of 3.7%.
Inflation is expected to decline globally. The IMF forecasts inflation to drop to 4.2% in 2025 and 3.5% in 2026. However, inflation remains stubbornly high in some regions.
The IMF also highlighted declining energy commodity prices, which are projected to fall by 2.6% in 2025. Non-fuel commodity prices, however, are expected to rise by 2.5% due to adverse weather conditions impacting production.
Mixed Growth for Major Economies
Global growth projections show mixed trends for major economies. The United States is expected to perform well, with GDP growth forecast at 2.7% in 2025. This is 0.5 percentage points higher than previous estimates. Growth is expected to slow to 2.1% in 2026.
The euro area faces slower growth. Its GDP is forecast to grow by 1% in 2025, revised down from 1.2%. Growth is expected to recover to 1.4% in 2026. The IMF attributed this slowdown to weak manufacturing momentum and policy uncertainties.
The United Kingdom’s economy is projected to grow by 1.6% in 2025 and 1.5% in 2026.
Asian Economies Show Resilience
China’s GDP is forecast to grow by 4.6% in 2025 and 4.5% in 2026. The IMF urged China to boost domestic demand for sustained growth.
India is projected to maintain robust growth. The IMF forecasts India’s GDP to increase by 6.5% in both 2025 and 2026. This aligns with the country’s strong economic potential.
Challenges and Opportunities
The IMF report highlights economic divergence across regions. Stronger growth in the U.S. is balancing weaker results in other major economies. While inflationary pressures are easing globally, some regions face persistent challenges.
For Pakistan, the downgraded growth forecast reflects ongoing economic hurdles. However, the country’s medium-term prospects remain positive, with a potential recovery in 2026.
