Islamabad, January 18,2025- The International Monetary Fund (IMF) has revised its economic outlook for Pakistan, lowering the country’s projected GDP growth for 2025 to 3%, down from the earlier forecast of 3.2%. This adjustment, highlighted in the IMF’s World Economic Outlook Update: Global Growth – Divergent and Uncertain, reflects ongoing economic challenges in Pakistan, though the IMF did not specify the reasons behind the revision. Despite this, Pakistan’s GDP growth for 2026 is still projected to remain at 4%, signaling a moderate but steady recovery in the medium term.
The IMF’s decision to revise Pakistan’s growth outlook aligns with a similar adjustment made by the Asian Development Bank (ADB), which last month raised its growth forecast for the 2024-25 fiscal year to 3%, up from the previous projection of 2.8%. Both the IMF and ADB have acknowledged the difficulties facing Pakistan’s economy but remain cautiously optimistic about its medium-term prospects.
On a global scale, the IMF has forecasted global economic growth of 3.3% for both 2025 and 2026, slightly below the historical average of 3.7%. According to Pierre-Olivier Gourinchas, the IMF’s chief economist, the global economy is experiencing divergent growth patterns, with the United States showing stronger-than-expected performance, which is helping to offset weaker results in other major economies. This has led to a complex economic landscape worldwide, where some countries are faring better than others.
Inflationary trends are expected to ease in the coming years. The IMF has projected a decline in global inflation to 4.2% in 2025 and 3.5% in 2026, although it warned that inflation remains stubbornly high in some regions, particularly in emerging economies. At the same time, energy commodity prices are forecasted to decline by 2.6% in 2025, while non-fuel commodity prices are expected to rise by 2.5%, driven by adverse weather conditions affecting major producers.
The IMF’s global projections show varied economic outcomes for different regions. In the United States, GDP growth is expected to reach 2.7% in 2025, an upward revision from previous forecasts, driven by stronger domestic demand. However, U.S. growth is expected to slow to 2.1% in 2026. Meanwhile, the euro area is projected to experience weaker growth, with a forecast of just 1% in 2025, down from an earlier estimate of 1.2%. This adjustment reflects slower-than-expected momentum, particularly in manufacturing, along with ongoing political and policy uncertainties. However, the IMF anticipates a recovery in 2026, with eurozone growth projected to rise to 1.4%.
In the United Kingdom, GDP growth is expected to be modest, with projections of 1.6% in 2025 and 1.5% in 2026. China’s economy, on the other hand, is expected to grow at 4.6% in 2025 and 4.5% in 2026. The IMF has urged China to focus on boosting domestic demand to sustain its economic expansion. India continues to show strong growth, with a projected GDP increase of 6.5% for both 2025 and 2026, reflecting the country’s robust economic potential.
As the IMF’s updated projections highlight, the global economy remains in a period of uncertainty, with diverging growth paths across regions. For Pakistan, while the revised growth forecast underscores the country’s ongoing economic challenges, it also reflects a cautiously optimistic outlook for the coming years, with hopes for a more stable economic recovery as the medium term unfolds.
