ADB revises Pakistan's economic growth to 2.7 per cent in FY25

ISLAMABAD – July 23, 2025: The Asian Development Bank (ADB) has released its Outlook 2025 report, indicating that Pakistan’s economy showed a slight improvement in fiscal year 2025, with a GDP growth rate recorded at 2.7 per cent.

According to the report, the State Bank of Pakistan reduced the policy interest rate by 1.5 per cent by the end of June 2025.

Despite this cut, ADB noted that the overall pace of economic growth remained modest, and a significant shift is unlikely in 2026.

The report highlighted persistent risks linked to external factors, particularly uncertainty over tariffs imposed by the United States on Pakistani exports, which could pose challenges to trade.

On inflation, the ADB observed that Pakistan continued to experience a downward trend. Both food and non-food inflation rates have shown a gradual decline during the first eleven months of 2025 in Pakistan.

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The ADB report offers a cautiously optimistic outlook, acknowledging some stability in macroeconomic indicators in Pakistan while noting the structural challenges that could limit stronger growth momentum in the near future.

Meanwhile, the Asian Development Bank (ADB) on Wednesday lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year.

The downgrades are driven by expectations of reduced exports amid higher United States (U.S.) tariffs and global trade uncertainty, as well as weaker domestic demand.