The International Monetary Fund (IMF) has maintained Pakistan’s GDP growth forecast for fiscal year 2026 (July 2025–June 2026) at **3.2%**, down from **3.6%** in its October 2025 outlook, but not further reduced it to **3%**, according to its January 2026 World Economic Outlook update. Earlier estimates had pegged growth at around **3%** for calendar year 2025 or FY2025, which was expected to gradually increase to **4.1%** in FY2027. Some media reports and analyzes (e.g., citing Zee News and The News International in New Kerala) incorrectly cited a decline of **3.2%** to **3%**, possibly mixing calendar-year estimates or experts’ pessimism, that real growth may be closer to **2.5–3%** due to weak exports and investment.
Large Scale Manufacturing (LSM) data refutes claims of contraction: Pakistan Bureau of Statistics recorded a year-on-year growth of **6.01%** in LSM during July-November FY2026 (first five months), the highest for the period since FY2016, driven by textile, automobile, petroleum and other sectors (growth of **10.4%** in November alone). There is no evidence of a **1.25%** contraction in this time frame; Previous financial periods had seen declines, but recovery is evident.
Remittances remain a bright spot, reaching a record **$8.8 billion** in Q1 FY2025 (July-September 2024), up **39%** year-on-year. For Q1 FY2026 (July-September 2025), inflows further increased to approximately **$9.5 billion** (up **8%** from $8.8 billion last year), strengthening reserves.
Pakistan’s economy is showing signs of stabilization: current account surplus, strong rupee, declining inflation, and policy rate cuts (aided by the IMF’s $7 billion Extended Fund Facility and the UAE’s $2 billion deposit rollover). However, growth remains slow, dependent on external support, remittances and credit. The IMF’s conditions call for fiscal tightening—that is, higher taxes, lower subsidies, and spending cuts—making the recovery difficult.
Experts stress on structural reforms to attract FDI, increase exports, privatize loss-making government companies and reduce debt dependence for sustainable growth beyond sustainability. Although macroeconomic indicators have improved, low investment and competitiveness pose risks to long-term stability in the populous country.
