IMF Projects Pakistan Growth At 3.5pc, Inflation Near 10pc

Islamabad, October 14

The International Monetary Fund (IMF) has projected Pakistan’s economy to grow by 3.5 per cent in fiscal year 2026–27, while inflation is expected to reach 9.9 per cent, according to its latest World Economic Outlook. The growth estimate is below the government’s target of around four per cent.

Inflation And External Pressures

The Fund expects headline inflation to increase from 7.1 per cent in the previous fiscal year to 9.9 per cent. It also forecasts Pakistan’s current account to move into a deficit equal to one per cent of gross domestic product, compared with a surplus of 0.5 per cent in fiscal year 2025–26. Higher energy costs and external economic shocks remain risks for a country reliant on imported fuel and external financing.

Employment Outlook

The IMF projected Pakistan’s unemployment rate to decline to 6.5 per cent this year, from 6.9 per cent previously. The forecast comes as the country faces pressure to create jobs for a rapidly growing population and to improve opportunities for young people entering the labour market.

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Growth Risks

The report warns that energy-importing economies can face a difficult mix of higher import bills, currency pressures, reduced purchasing power and limited room for government spending. These pressures may affect households and businesses even if headline economic growth remains positive.

Policy Choices

The IMF has urged governments to strengthen fiscal frameworks and use targeted, temporary support for vulnerable households during cost-of-living crises. Pakistan’s outlook will depend on inflation management, exports, investment, energy prices and the government’s ability to maintain financial stability while supporting economic activity.