The International Monetary Fund (IMF) has revised Pakistan’s economic outlook, lowering its gross domestic product (GDP) growth forecast for 2025 to 3% from 3.2% forecast just three months ago.
This adjustment is part of a broader global economic assessment presented in the IMF’s “World Economic Outlook Update: Global Growth – Divergent and Uncertain”.
The IMF’s revised projections also indicate that Pakistan’s GDP growth will remain at 4% in 2026. However, the latest downward revision reflects the continuing economic challenges in the country, although the IMF did not provide specific reasons for this review.
This latest revision reflects forecasts made last month by the Asian Development Bank (ADB), which also adjusted Pakistan’s growth forecast to 3% for the 2024-25 financial year, from 2.8% previously forecast.
Both institutions discussed the challenges facing Pakistan’s economy, but maintained a cautiously optimistic outlook for the medium term.
Global economic growth forecast
Globally, the IMF projects a global growth rate of 3.3% for 2025 and 2026, slightly lower than the historical average of 3.7%.
IMF Chief Economist Pierre-Olivier Gourinchas noted that the global economy continues to face divergent growth patterns, with stronger-than-expected performance in the United States partly offsetting weaker results in other major economies.
Inflationary trends are expected to ease in the coming years, with the IMF forecasting a decline in global inflation to 4.2% in 2025 and 3.5% in 2026. However, the IMF has warned that inflation remains stubbornly high in some regions, despite a global trend towards disinflation. .
The IMF also noted a significant decline in energy commodity prices, with a projected decline of 2.6% in 2025, while non-fuel commodity prices are expected to increase by 2.5%, largely due to adverse weather conditions affecting major producers.
Growth projections for regional and major economies
The IMF’s global outlook includes more optimistic projections for some major economies. In the United States, GDP growth is expected to reach 2.7% in 2025, revised upward by 0.5 percentage points due to strengthening domestic demand. However, US growth is expected to slow to 2.1% in 2026.
In contrast, the Eurozone faces a weaker economic trajectory, with growth projected at 1% for 2025, down from an earlier estimate of 1.2%.
This downward revision reflects slower-than-expected momentum, particularly in the manufacturing sector, and continued policy and policy uncertainties. The IMF forecasts a recovery in 2026, with growth expected at 1.4%.
The UK is expected to see modest growth, with an estimated increase of 1.6% in 2025 and 1.5% in 2026.
Meanwhile, China’s GDP is expected to grow by 4.6% in 2025 and 4.5% in 2026, with the IMF urging China to boost domestic demand to support its economic expansion.
India, on the other hand, continues to show robust growth, with the IMF forecasting a solid 6.5% increase in GDP in 2025 and 2026, in line with its potential.
As the IMF outlook suggests, the global economy remains in a period of uncertainty, with diverging growth trajectories across regions.
