- The IMF forecasts Pakistan’s GDP growth of 4% in 2026.
- Expects a 2.6% drop in energy commodity prices in 2025.
- It forecasts a 2.5% increase in the prices of raw materials excluding fuel.
The International Monetary Fund (IMF) has lowered Pakistan’s gross domestic product (GDP) growth forecast for 2025 to 3%, from the previous forecast of 3.2% in October 2024.
In its “World Economic Outlook Update: Global Growth: Divergent and Uncertain,” the IMF said it expects the country’s GDP growth to remain at 4% in 2026.
The IMF’s growth projection is similar to that of the Asian Development Bank (ADB) which last month revised Pakistan’s growth forecast to 3% in the 2024-25 financial year, from the previous figure of 2%. .8% expected in September 2024.
The ADB, in its December 2024 Asian Development Outlook (ADO), had attributed the revised growth figures to greater macroeconomic stability which it said would support the recovery.
The lender also said a more accommodative monetary policy due to a faster-than-expected easing of inflationary pressures should further support economic activity through a rebound in private investment and noted that industrial production growth is expected to continue. accelerate with the suspension of import management measures, an increase in investors. confidence and easier access to currencies.
At the same time, the IMF, in its latest report, forecasts a global growth rate of 3.3% in 2025 and 2026, a figure lower than the historical average of 3.7%.
The Washington-based bank said the forecast for 2025 was “broadly unchanged due to an upward revision in the United States offsetting downward revisions in other major economies.”
Concerning global inflation, it is expected to fall to 4.2% in 2025 and to 3.5% in 2026.
However, noting that although disinflation continued globally, the IMF said there were signs that progress was stalling in some countries and that high inflation persisted in a few cases.
“The global median of sequential core inflation has hovered just above 2% in recent months.”
Highlighting an increase in economic policy uncertainty, the report said that “expectations of policy changes under newly elected governments in 2024 have shaped financial market prices in recent months” and that “episodes of “Political instability in some Asian and European countries has shaken markets and injected additional uncertainty over stalled progress on fiscal and structural policies.”
Forecasting a 2.6% decline in energy commodity prices in 2025, the IMF said non-fuel commodity prices are expected to increase by 2.5% due to bad weather affecting large producers.
Global economies
The report says U.S. GDP growth is expected to be 2.7% – 0.5% higher than the October forecast – in 2025, and will decline to 2.1% in 2026.
At the same time, in the Eurozone, “weaker than expected dynamics at the end of 2024, particularly in the manufacturing sector, and increased policy and political uncertainty explain a downward revision from 0.2% to 1% in 2025 “.
However, growth is expected to reach 1.4% in 2026 due to stronger domestic demand and reduced uncertainties.
In the UK, growth of 1.6% is forecast for 2025, followed by 1.5% next year.
China’s GDP growth, according to IMF forecasts, is expected to be 4.6% in 2025 and 4.5% in 2026, with the lender’s chief economist Pierre-Olivier Gourinchas stressing that the world’s second-largest economy was expected to make domestic demand a more important driver of its growth. growth.
“The Chinese economy needs to shift towards a more domestically driven growth engine,” Gourinchas said.
India’s growth is expected to be solid at 6.5% in 2025 and 2026, as forecast in October and in line with potential.
— Additional contribution from Reuters