ADB Maintains Pakistan’s Growth Forecast at 3.7% as Energy Costs Raise Concerns
The Asian Development Bank (ADB) has maintained its forecast for Pakistan’s economic growth at 3.7% for fiscal year 2027, while warning that higher energy, logistics and agricultural input costs could put pressure on the economy.
The latest outlook comes as Pakistan continues economic reforms and works to strengthen investment, reserves and external stability.
Inflation Forecast Raised to 8.3%
Alongside the 3.7% growth projection, the ADB expects Pakistan’s average inflation to rise to 8.3% in FY2027. The bank said elevated energy, logistics and agricultural input costs could continue to affect domestic prices.
The projected inflation rate is above the State Bank of Pakistan’s medium-term target range of 5% to 7%.
Energy Costs Remain a Major Risk
Higher energy prices are among the key challenges highlighted in the latest outlook. Rising fuel and energy costs can increase transportation, production and import expenses, which may eventually affect prices for households and businesses.
The ADB also warned that continued geopolitical tensions and disruptions in international markets could create additional pressure on Pakistan’s economic outlook.
Pakistan’s Economy Grew 3.7% in FY2026
Pakistan’s economy expanded by 3.7% in fiscal year 2026, compared with 3.2% a year earlier, according to the ADB. The recovery was supported by improvements across several parts of the economy.
The bank said stronger reserves, economic reforms and renewed access to international capital markets have provided support for the country’s economic outlook.
Private Investment Could Support Growth
The ADB expects private investment to remain an important source of economic activity. Improvements in financing conditions and policy measures could help businesses increase investment if economic stability continues.
However, higher energy and other input costs could increase expenses for manufacturers and businesses, potentially limiting the pace of expansion.
External Risks Remain
The ADB has also identified external risks, including developments in the Middle East, higher global energy prices and disruptions to international supply chains.
These factors could affect Pakistan through higher import costs, inflationary pressure and changes in external financing conditions.
Conclusion
The ADB’s latest outlook keeps Pakistan’s FY2027 growth forecast at 3.7%, while inflation is projected at 8.3%. The report indicates that continued reforms, private investment and economic stability will remain important, while high energy and logistics costs could create challenges for faster growth.