IMF Projects Economic Growth for Pakistan Beyond 2025: A Glimmer of Hope?
the International Monetary Fund (IMF) has projected that Pakistan’s economy is expected to recover gradually in the coming years, with a GDP growth rate of 2.6% in FY2025, and a steady increase to 4.5% by 2030. The forecast signals cautious optimism for a country that has faced repeated economic setbacks, fiscal crises, and political instability in recent years.
A Turning Point for Pakistan?
According to the IMF, Pakistan’s economy is poised for incremental but sustainable growth, provided the country adheres to structural reforms and maintains fiscal discipline. After facing one of its worst economic crises in 2022–2023 — marked by soaring inflation, shrinking foreign reserves, and a plunging currency — Pakistan turned to the IMF for support through a Stand-By Arrangement (SBA).
The program, initiated in 2023 and recently reviewed positively by the IMF, paved the way for further disbursement of funds and opened the door for long-term collaboration. As part of the agreement, Pakistan has committed to policy reforms, subsidy reductions, and budgetary control.
The IMF’s latest projections outline a slow but encouraging path forward:
FY2025 GDP growth: 2.6%
FY2026 GDP growth: 3.6%
FY2027–2030 average GDP growth: 4.5%
These estimates, while modest, suggest that Pakistan could be entering a phase of recovery and medium-term growth, assuming no major shocks derail the process.
Inflation Still a Concern
One of the most significant challenges facing the country is inflation, which has remained persistently high over the last few years. Although inflation is expected to ease to 5.1% in FY2025, it may rise again to 7.7% in FY2026, before stabilizing around 6.5% during 2027–2030.
High inflation has eroded purchasing power, increased poverty, and contributed to public discontent. The government has responded by tightening monetary policy, reducing subsidies, and attempting to control public spending. However, the effectiveness of these measures will depend heavily on political stability and institutional commitment.
Fiscal and Current Account Outlook
Another key takeaway from the IMF report is the decline in Pakistan’s public debt-to-GDP ratio, which is expected to fall from around 72% in FY2026 to approximately 61% by 2030. This projected reduction signals a gradual return to fiscal sustainability — a crucial step toward restoring investor confidence.
The current account deficit, which had widened alarmingly in previous years, is also expected to remain under control. The IMF anticipates a manageable deficit of -0.1% of GDP in FY2025, and -0.4% in FY2026. These figures reflect improved trade balances and stricter controls on imports and foreign currency outflows.
Government Reforms: “Uraan Pakistan” Initiative
In December 2024, the Government of Pakistan launched a new five-year economic transformation strategy titled “Uraan Pakistan”. The plan aims to bring about:
Export-led growth,
Digital transformation,
Energy and infrastructure development,
Institutional reforms, and
Job creation in both the formal and informal sectors.
This policy initiative is closely aligned with IMF goals and may help ensure that reforms are implemented holistically. While the vision is ambitious, its success will depend on execution, public-private partnerships, and global investor trust.
IMF Support: A Vote of Confidence?
The IMF recently approved the first review of Pakistan’s SBA, releasing approximately $1.1 billion in funding, citing “strong reform progress so far.” This endorsement is being seen as a vote of confidence in the country’s macroeconomic policies and reform agenda.
However, the IMF has also warned against complacency. Structural bottlenecks, such as tax evasion, inefficient state-owned enterprises (SOEs), and a narrow export base, continue to limit economic potential.
To address these issues, Pakistan has started slashing development spending, cutting energy subsidies, and streamlining fiscal allocations. While these decisions are often unpopular domestically, they are essential to building long-term stability.
Challenges That Remain
Despite the promising outlook, several risks could derail Pakistan’s path to recovery:
Political uncertainty can delay or reverse economic reforms.
External shocks, such as rising oil prices or geopolitical tensions, may worsen the fiscal situation.
Climate vulnerability continues to threaten Pakistan’s agricultural sector and rural livelihoods.
Institutional weaknesses, including low tax compliance and corruption, hamper progress.
Moreover, Pakistan remains heavily dependent on external financing. While multilateral support from the IMF, World Bank, and friendly nations has provided temporary relief, long-term resilience will require building domestic capacity and diversifying the economic base.
Conclusion: A Fragile Optimism
The IMF’s projections for Pakistan signal a fragile but real opportunity for economic recovery and sustained growth. If the country can maintain fiscal discipline, pursue deep structural reforms, and foster investor confidence, it could emerge from its economic stagnation and set a course toward stability.
However, optimism must be tempered with realism. The road ahead is fraught with challenges — both economic and political. Success will depend on consistent policymaking, regional stability, and inclusive economic planning.
Reference: 2025 ء اور اس کے بعد پاکستان میں مزید ترقی ہوگی: آئی ایم ایف