The World Bank has released its latest economic assessment for Pakistan. The report states that the country’s economic growth will be constrained in the near term due to the impact of recent floods.
Real GDP growth is projected to remain at 3 percent for the fiscal year 2026. This is the same level of growth the economy experienced in the previous year.
The economy expanded by 3 percent in the fiscal year ending June 2025. This was an improvement from the 2.6 percent growth seen the year before.
However, the recent floods have imposed significant human and economic costs. They have dampened growth prospects and added pressure to macroeconomic stability. If Pakistan stays committed to its economic reforms, growth could pick up to 3.4 percent in FY27. The World Bank emphasizes that this recovery is not guaranteed and depends on continued stability.
Read: World Bank Projects Pakistan’s GDP Growth at 2.6% for 2025-26
The World Bank stressed that “staying the course on reforms is critical.” This includes a balanced mix of revenue and expenditure measures to manage flood impacts. Key priorities include broadening the tax base and improving tax administration. Reducing the state’s role in the economy by reforming state-owned enterprises is also vital.
The report highlights a major decline in exports as a percentage of GDP. To achieve long-term stability, Pakistan must shift towards export-led growth. This requires broader measures like a market-determined exchange rate, stronger trade finance, and improved logistics. These steps are essential to break the cycle of boom and bust.
