Fitch Ratings has projected Pakistan’s real GDP growth to reach 3.5% by 2027, up from 2.5% in 2024, signalling a robust economic recovery.
The global credit rating agency upgraded Pakistan’s Long-Term Issuer Default Rating (IDR) to ‘B-’/Stable from ‘CCC+’ in April 2025, citing ongoing reforms, improved fiscal performance, and macroeconomic stability.
Pakistan’s economy has stabilised after a turbulent period. Inflation, which soared to 38% in May 2023, dropped to 4.1% by July 2025, with Fitch expecting an average of 5% for the year. The State Bank of Pakistan halved its policy rate to 11% since May 2024, reducing currency volatility and fostering current account surpluses.
Fitch noted, “The combination of lower interest rates and an improving macroeconomic environment will stimulate private credit demand, leading to steadier loan and deposit growth.”
Read: Moody’s Upgrades Pakistan’s Credit Rating
Pakistan’s banking sector looks set for growth as operating conditions improve. Private-sector credit, which fell to 9.7% of GDP in 2024, is expected to rebound and reduce reliance on public-sector lending. The sector’s impaired loan ratio fell to 7.1% by March 2025, down from 7.6% in 2023, supported by 26% loan growth. Fitch expects banks to benefit from higher business volumes as economic headwinds ease.
Despite these gains, Fitch warns that Pakistan’s operating environment remains weak. The sovereign’s low credit rating continues to pose risks, as banks carry significant exposure to government securities and state-linked entities. Sustained economic and fiscal reforms remain essential to preserve momentum and strengthen financial stability.
