IMF has lowered Pakistan’s projected GDP growth rate for fiscal 2026-27 to 3.5% from 4.1%, citing tensions in the Middle East as the main reason behind it.
Furthermore, according to IMF, if there were an escalation in tension, it would cause significant damage to the world economy. The forecast of GDP growth rate for the current fiscal year remains unchanged at 3.6%, matching expectations from other prominent organizations.
However, the IMF sees inflation as a threat to economic stability. The forecast of the inflation rate for the next fiscal year has been revised higher by the IMF to 8.4% from 7%. This year, inflation is expected to average 7.2%, higher than last year’s 6.3%.
High inflation may pressure Pakistan’s central bank to raise interest rates or at least keep them elevated.
The IMF has also revised its forecast for Pakistan’s external sector. The current account deficit in the next fiscal year could now reach 0.9 percent of GDP, or approximately $5 billion, which is double the previous estimate. However, this estimate for the current year has been kept at 0.4 percent.
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The IMF report states that Pakistan could be particularly affected by the situation in the Middle East, as it imports approximately 90 percent of its energy (oil and gas) from there. If oil and gas prices rise or supply disruptions occur, the country’s economic situation could face increased pressure.
In addition to Pakistan, the IMF has also expressed concern about the global economy. According to the IMF, global growth is expected to be 3.1 percent in 2026 and 3.2 percent in 2027, which is lower than the previous average (around 3.4 percent).
Global inflation could reach 4.4 percent in 2026 and is expected to decline slightly to 3.7 percent in 2027.
