The Asian Development Bank (ADB) has maintained its forecast for Pakistan’s economic growth at 3.7% for fiscal year 2027, below the government’s budget target of 4%.
According to the ADB’s latest report on Pakistan’s economy, continued reforms and stronger foreign exchange reserves are supporting the country’s economic outlook.
Pakistan’s economic performance improved during the previous fiscal year, with growth rising to 3.7% from 3.2% in FY2025. The ADB said the improvement was broad-based, supported by a recovery in services and manufacturing and better performance in agriculture.
However, the Middle East conflict slowed economic activity during the final quarter of the fiscal year.
The ADB said an improvement in Pakistan’s sovereign credit rating in FY2027 could help increase private investment. It added that high energy costs and external uncertainty could limit the pace of economic growth.
According to the report, Pakistan has made progress in strengthening macroeconomic stability over the past two years. Maintaining reforms and promoting private investment will remain important for achieving broader-based growth.
Growth in FY2026 was supported by expansion in the manufacturing and services sectors. Despite floods, the agriculture sector grew by 2.9%.
Lower interest rates and improved business confidence also contributed to an 8.6% increase in private investment during FY2026.
The report said fiscal consolidation continued during the year, while Pakistan’s gross international reserves increased, strengthening the country’s external position.
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