The World Bank has projected 3.8% economic growth for Pakistan in FY2026-27, slightly below the government’s 4% target. The forecast comes in the bank’s latest economic update for the region.
The bank expects Pakistan’s economy to maintain a gradual recovery despite regional tensions, high energy costs and economic pressures. It has also projected inflation at 8.2% during the fiscal year, up from an estimated 7.1% in FY2025-26.
World Bank Growth Forecast for Pakistan
The latest forecast puts Pakistan’s growth at 3.8% for FY2026-27. The figure remains below the government’s 4% growth target under its economic plan.
The World Bank also expects per-capita GDP growth to reach 2.2% in FY2026-27, compared with 2.1% in the previous fiscal year. The current account deficit could widen to 0.8% of GDP, while the fiscal deficit is projected at 3.5% of GDP.
Pakistan recorded an estimated 3.7% GDP growth in FY2025-26. The new forecast suggests that economic activity could improve further, but the pace remains moderate.
Inflation and Poverty Remain Major Concerns
The growth forecast comes alongside serious concerns about poverty. The World Bank said Pakistan accounts for nearly 48% of the extreme poor in the MENAAP region, which covers the Middle East, North Africa, Afghanistan and Pakistan.
The bank said poverty in Pakistan increased by 6.4 percentage points between 2018-19 and 2024-25. It also noted that the MENAAP region remains the only region globally where poverty is still above pre-pandemic levels.
Higher inflation could add pressure on household budgets. The World Bank expects consumer price inflation to rise to 8.2% in FY2026-27, making price stability an important challenge for policymakers.
[IMAGE: World Bank building or Pakistan economic growth-related photo]
AI Could Create New Economic Opportunities
The latest World Bank report also highlights artificial intelligence as a potential source of jobs and productivity growth. Pakistan is among the countries in the region that could benefit from wider AI adoption.
The bank’s broader South Asia outlook says strong domestic demand has helped the region remain resilient despite global challenges. However, it warned that higher energy prices, climate risks and financial pressures could affect future growth.
For Pakistan, the 3.8% forecast points to continued economic recovery, but the country still faces major challenges. Reducing poverty, controlling inflation, improving productivity and creating jobs will remain important for sustaining growth in the coming fiscal year.
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