The World Bank Pakistan GDP forecast has been updated for FY2025–26, lowering growth to 2.6% from the earlier estimate of 3.1% made in June 2025. This downward revision is a result of various fiscal challenges and the ongoing floods that have swept across the nation, underscoring the increasing pressures on Pakistan’s economy and raising alarms about the short-term recovery.
Floods Disrupt Economic Activity
The recent floods have wreaked havoc in crucial agricultural areas, especially in Punjab, which is Pakistan’s largest crop-producing region. Initial estimates suggest a 10% drop in agricultural output, impacting essential crops like rice, sugarcane, cotton, wheat, and maize.
The infrastructure has also suffered, with 2,133 kilometers of roads and 248 bridges destroyed, leading to significant disruptions in supply chains. These interruptions are driving up transportation costs and causing delays in the delivery of goods, which is affecting both the industrial and consumer sectors.
The World Bank has pointed out that while Pakistan has made strides in maintaining fiscal discipline, natural disasters like these floods are likely to hinder economic recovery and exert further pressure on inflation, which could continue to rise through 2027.
Fiscal and Economic Challenges
In addition to the flood-related issues, Pakistan is grappling with structural economic challenges, such as high public debt, deficits in the energy sector, and currency fluctuations. The revised GDP forecast takes into account both the immediate impacts of the floods and the persistent economic issues. Analysts caution that without prompt policy measures, growth may fall short of government targets, potentially jeopardizing investments, employment, and overall economic stability.
Government Measures and Response
In response, the Pakistani government has announced steps to stabilize the economy, including tightening fiscal policies, monitoring inflation, and boosting infrastructure recovery in flood-affected areas. Authorities are also collaborating with international partners to secure emergency funding and rebuild critical infrastructure to mitigate long-term losses.
Medium-Term Outlook and Implications
Looking ahead, the World Bank projects a recovery in FY2026–27, with GDP growth expected to accelerate to 3.4%, contingent upon successful reconstruction efforts, stabilization of agricultural production, and improvements in supply chain efficiency.
The revised forecast underscores the vulnerability of Pakistan’s economy to natural disasters and fiscal challenges. While floods have immediate negative effects, structural reforms and proactive measures can help stabilize growth in the medium term, providing hope for economic resilience.
Also read, Pakistan vs Afghanistan AFC Asian Cup Qualifier Could be Cancelled Amid Visa Issues
