The International Monetary Fund (IMF) has revised Pakistan’s economic outlook, lowering its projected Gross Domestic Product (GDP) growth for 2025 to 3%, down from 3.2% forecast just three months ago.
The adjustment comes amid 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 downgrade reflects the current economic challenges in the country, although the IMF did not provide specific reasons for the revision.
This latest revision reflects the forecast made by the Asian Development Bank (ADB) last month, which also adjusted Pakistan’s growth forecast to 3% for fiscal year 2024-25, up from 2.8% projected earlier.
Both institutions have cited the challenges facing Pakistan’s economy, but have maintained a cautiously optimistic outlook for the medium term.
Global economic growth forecasts
Globally, the IMF forecasts a global growth rate of 3.3% for both 2025 and 2026, slightly below the historical average of 3.7%.
IMF Chief Economist Pierre-Olivier Gourinchas noted that the global economy continues to face divergent growth patterns, and that better-than-expected performance in the United States partially offset weaker results in other major economies.
Inflation trends are expected to ease in the coming years, with the IMF projecting that global inflation will decline to 4.2% in 2025 and 3.5% in 2026. However, the IMF warned that inflation remains stubbornly high. in some regions, despite a global trend of disinflation. .
The IMF also noted a significant decline in energy commodity prices, with a forecast drop of 2.6% in 2025, while non-fuel commodity prices are expected to rise by 2.5%, largely partly due to adverse weather conditions affecting key producers.
Growth projections of the main regional economies and
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 upwards by 0.5 percentage points due to higher domestic demand. However, US growth is forecast to slow to 2.1% in 2026.
Instead, the euro area faces a weaker economic trajectory, with growth projected at 1% by 2025, down from a previous estimate of 1.2%.
This downward revision reflects slower-than-expected momentum, particularly in the manufacturing sector, and current political and policy uncertainties. The IMF forecasts a recovery in 2026, with growth expected to rise to 1.4%.
The UK is forecast 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 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 solid growth, with the IMF projecting a solid 6.5% GDP growth in both 2025 and 2026, in line with its potential.
As the IMF outlook suggests, the global economy remains in a period of uncertainty, with divergent growth trajectories across regions.
