ISLAMABAD: The Asian Development Bank (ADB) has maintained its economic growth forecast for Pakistan at 3.7% for fiscal year 2027, saying continued reforms and stronger foreign exchange reserves are supporting the country’s economic outlook.
The Manila-based lender said Pakistan’s economy improved during fiscal year 2026, with gross domestic product (GDP) growth rising to 3.7% from 3.2% in fiscal year 2025.
According to the ADB, the recovery was broad-based, with stronger performance in the manufacturing and services sectors alongside an improvement in agriculture. However, the bank noted that the conflict in the Middle East slowed economic activity during the final quarter of the previous fiscal year.
Reforms and reserves support economic outlook
The ADB identified economic reforms, stronger reserves and renewed access to international capital markets as positive developments for Pakistan.
It said an improvement in the country’s sovereign credit rating was expected to encourage higher private investment. At the same time, the lender warned that high energy costs and external uncertainty could restrict a faster pace of economic growth.
The bank said Pakistan had made progress in strengthening economic stability over the past two years, while continued reforms and efforts to promote private investment would remain important for achieving more inclusive growth.
Growth during fiscal year 2026 was supported mainly by expansion in manufacturing and services. Despite flood-related challenges, the agriculture sector grew by 2.9%, while private investment increased by 8.6% amid lower interest rates and improved business confidence.
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The ADB also noted that Pakistan’s overall international foreign exchange reserves had increased, improving the country’s ability to withstand external pressures.
ADB Growth Projections 2026:
People’s Republic of China: 4.6%
India: 7%
Indonesia: 5.2%
Thailand: 2%
Philippines: 3.3%
Vietnam: 7.8%
Bangladesh: 3.7%
Malaysia: 4.9%
Pakistan: 3.7%
Türkiye: 2.8%
Kazakhstan: 4.8%🔗 More in our #ADO2026 September update:… pic.twitter.com/Who5VAmNEk
— Asian Development Bank (@ADB_HQ) September 23, 2026
Risks rising across developing Asia
The ADB projected that economic growth across developing Asia and the Pacific would slow from 5.5% in 2025 to 5% in 2026 before recovering slightly to 5.1% in 2027.
ADB President Masato Kanda said the region had remained resilient, but risks were increasing.
He warned that a strengthening El Niño and drier conditions could lead to smaller harvests and reduced hydropower generation, potentially pushing food and energy prices higher and placing greater pressure on vulnerable populations.
Kanda said the prolonged energy crisis and renewed risks in financial markets made it increasingly important for governments to prepare for potential shocks and protect people most exposed to rising economic pressures.
