ISLAMABAD: (Staff Reporter) – The Asian Development Bank (ADB) has revised down Pakistan’s economic growth forecast for fiscal year 2026-27 while raising its inflation projection, citing regional uncertainty, energy-market risks and the potential impact of continuing tensions in the Middle East.
In its latest Asian Development Outlook report, the ADB reduced Pakistan’s projected gross domestic product (GDP) growth rate from 4.5 per cent to 3.7 per cent for the current fiscal year.
The bank also raised its forecast for average annual inflation from 6.5 per cent to 8.3 per cent.
The federal government has set a GDP growth target of 4 per cent for 2026-27 and aims to keep average inflation at 8.2 per cent. However, the ADB warned that instability in the Middle East could add further pressure on prices, particularly through uncertainty in regional energy markets.
According to the report, disruptions in energy supplies and supply chains have increased production costs and weakened economic activity across the region.
The ADB has also decided to provide Pakistan financing worth $4 billion.
For developing Asia and the Pacific, the ADB lowered its 2026 growth forecast to 4.9 per cent, compared with 5.1 per cent projected in April. The revised forecast is also 0.6 percentage points below the 5.5 per cent growth recorded in 2025.
The report maintained the region’s 2027 growth forecast at 5.1 per cent, expecting economic activity to recover as pressures from energy and supply-chain disruptions ease.
South Asia’s growth outlook was reduced to 6 per cent in 2026 and 6.7 per cent in 2027 due to higher oil prices, increased freight costs and uncertainty surrounding remittances.
Inflation across developing Asia and the Pacific is projected to rise to 4.3 per cent in 2026 from 3 per cent in 2025, driven mainly by higher oil and gas prices and their spillover effects on other commodities. Inflation is expected to ease to 3.4 per cent in 2027.
The ADB identified major downside risks, including a renewed escalation in the Middle East conflict, prolonged uncertainty in energy markets, tighter global financial conditions, rising trade-policy uncertainty, food-price pressures and a deeper property-sector downturn in China.
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