ADB Keeps Pakistan Growth Forecast Unchanged at 3.7%

The Asian Development Bank (ADB) has kept Pakistan’s economic growth forecast unchanged at 3.7 percent for the current fiscal year, while projecting inflation at 8.3 percent, slightly above the government’s estimate, despite mounting risks from the ongoing conflict in the Middle East.

In its Asian Development Outlook July 2026, the Manila based lender said Pakistan’s growth outlook remains unchanged, even as it lowered its forecast for developing Asia and the Pacific to 4.9 percent for 2026 from 5.5 percent in 2025. The revised regional forecast is 0.2 percentage points lower than its April projection, reflecting the economic impact of prolonged disruptions in global energy markets.

The ADB said the conflict in the Middle East has affected not only energy prices but also fertilizer markets, commodity prices, and global supply chains, keeping inflationary pressures elevated across the region. It expects disruptions in energy markets to ease only gradually despite a framework agreement signed in June.

For the broader region, inflation is now projected at 4.3 percent in 2026, up from 3 percent in 2025 and 0.7 percentage points higher than forecast in April. The lender left its regional inflation forecast for 2027 unchanged at 3.4 percent, while maintaining its regional growth forecast for 2027 at 5.1 percent, expecting economic activity to recover as current pressures ease.

ADB Chief Economist Albert Park said durable implementation of the June framework agreement could help stabilize global energy markets, although the pace of recovery remains uncertain. He noted that economies across developing Asia continue to show resilience but face the challenge of supporting growth while containing inflation.

The bank warned that renewed geopolitical tensions, tighter global financial conditions, and higher borrowing costs remain key risks to the regional outlook. It also cautioned that rising tariffs, trade policy uncertainty, and higher fertilizer prices could weigh on economic activity, agricultural output, and food security.

Among major economies, the ADB left China’s growth forecasts unchanged at 4.6 percent for 2026 and 4.5 percent for 2027, supported by strong exports and infrastructure investment. India’s growth forecast for 2026 was lowered to 6.6 percent due to higher energy costs, while its 2027 projection remained at 7.3 percent. Growth forecasts for Southeast Asia and the Pacific were also revised downward because of weaker domestic demand, slower tourism, rising inflation, and higher import costs.