ISLAMABAD:

Despite the disruption caused by mid-year floods, Pakistan’s growth outlook for both fiscal year 2025 and 2026 has been upgraded by the Asian Development Bank (ADB), as indicated in its latest report released on Wednesday.

The Asian Development Outlook (ADO) December 2025 noted that, despite the challenges posed by June floods, Pakistan’s economy grew 5.7% in the fourth quarter of FY25. The report also highlighted strong performance by the large-scale manufacturing sector in recent months. “Pakistan’s growth outlook for FY2025 has been revised upwards following a stronger-than-expected performance in Q4,” the report stated. It added that the government of Pakistan had updated its GDP growth estimate for FY25 to 3%, up from the previously projected 2.7%.

Additionally, inflation in the first four months of FY26 stood at 4.7%, a notable improvement from 8.7% during the same period of last year. Following a sharp spike after floods, prices of key food items have begun to stabilise. The upgrade in Pakistan’s growth forecasts reflects a less severe-than-anticipated impact from floods, the report elaborated.

For the broader South Asian region, growth remains robust. The ADB has revised upwards the region’s 2025 growth forecast to 6.5%.