World Bank lowers Pakistan’s GDP growth to 2.6pc for FY2025-26

Pakistan’s economy is projected to grow by 2.6 percent in FY2025-26, according to the World Bank economic report on the Middle East, North Africa, Afghanistan & Pakistan, reported 24NewsHD TV channel on Wednesday.

“Early estimates suggest at least a 10% drop in agricultural output in Punjab, affecting major crops such as rice, sugarcane, cotton, wheat, and maize. Without broader industrial and services spillovers and assuming a modest increase in development spending, this could reduce FY26 real GDP growth to 2.6%,” the World Bank report said.

The WB stated that real GDP growth had been projected to accelerate to 3.4% in FY26 and 3.6% in FY27, supported by higher agricultural output, lower inflation and interest rates, recovering consumer and business confidence, and a rebound in private consumption and investment.

The report noted that real GDP at factor cost grew by 2.7 percent year-on-year (YoY) in FY2024-25, compared to 2.5 percent in FY2023-24. The modest growth forecast for FY2025-26 reflects the impact of ongoing floods on the agriculture sector.

Early estimates indicated that agricultural output in Punjab is expected to decline by at least 10 percent, affecting major crops including rice, sugarcane, cotton, wheat, and maize.

For FY2026-27, the World Bank projected growth to accelerate to 3.4 percent, supported by higher agricultural output, lower inflation and interest rates, and a rebound in private consumption and investment.

The report highlighted a five-year tariff reform plan (2025–2030), aimed at reducing Pakistan’s historically high tariffs by half, which is expected to support export growth.

Inflation in Pakistan fell to single digits in FY2024-25 as food and energy price increases eased. 

However, disruptions to food supply chains due to floods are expected to raise inflation through 2027.

The report revealed that Pakistan has one of the highest fertility rates in the region, with projections indicating a fall below replacement level within one generation. 

It added that greater female participation in the labour market could increase GDP per capita by 20–30 percent.

Reporter Waqas Azeem