ADB Holds Pakistan Growth Forecast at 3.7pc Amid Energy Risks
ISLAMABAD: The Asian Development Bank has kept Pakistan’s economic growth projection unchanged at 3.7pc for the current fiscal year, while warning that inflation and energy-related pressures remain important risks for the country’s recovery path.
The Manila-based lender also projected Pakistan’s inflation at 8.3pc, a level slightly higher than the government’s own estimate. The assessment was issued in the ADB’s July 2026 economic outlook, which reviewed regional conditions amid fresh uncertainty caused by renewed tensions in the Middle East.
The unchanged forecast suggests that Pakistan’s economy is still expected to continue expanding, but without a major acceleration. For policymakers, the message is mixed: growth has not been downgraded, yet the inflation outlook shows that ordinary households and businesses may continue to face price pressure.
ADB Chief Economist Albert Park said the regional economy remained resilient, but persistent conflict-related headwinds required careful policy management. He noted that efforts to stabilise energy markets could help over time, though the pace of improvement remained uncertain and risks were still tilted to the downside.
The bank said disruption in global energy markets had affected the outlook for developing Asia and the Pacific more than previously expected. It lowered the region’s 2026 growth forecast to 4.9pc from 5.5pc in 2025, with inflation now expected to rise to 4.3pc this year.
The pressure is not limited to fuel alone. According to the outlook, higher energy costs can spill over into fertilisers, commodity prices, transport chains and food production, making inflation harder to control in economies that rely heavily on imports and external financing.
Pakistan remains particularly exposed because imported fuel is central to power generation, transport and industrial activity. Any rise in global energy prices can increase pressure on foreign exchange reserves, raise production costs and complicate government efforts to keep electricity and gas prices politically manageable.
The ADB also highlighted broader risks from tighter global financial conditions, higher borrowing costs, trade policy uncertainty and renewed geopolitical escalation. These risks matter for Pakistan because the country depends on external financing, remittances, exports and stable energy supplies to support its balance of payments.
Within the wider region, the bank kept China’s growth forecast unchanged while trimming India’s 2026 outlook to 6.6pc due to higher energy costs. The comparison shows that even larger economies are not fully insulated from the same global pressures shaping Pakistan’s near-term economic outlook.
The next challenge for Islamabad will be to protect growth while limiting inflation, especially as fuel markets, fertiliser prices and borrowing costs remain vulnerable to global shocks. The government’s response through fiscal discipline, energy planning and export support will determine whether the 3.7pc growth forecast becomes a stable recovery or another fragile pause in Pakistan’s economic cycle.