ISLAMABAD: Pakistan’s economy is expected to grow by 3 percent in the fiscal year ending June 2026, as post-flood recovery challenges continue to weigh on growth prospects, according to the latest *World Bank Economic Outlook*. The projection mirrors FY25’s 3 percent growth, reflecting a modest rebound in industry and services despite persistent weaknesses in agriculture.
“Pakistan’s recent floods have imposed significant human and economic costs, dampening growth and adding pressure on macroeconomic stability,” said Bolormaa Amgaabazar, the World Bank’s Country Director for Pakistan. “Staying the course on reforms and accelerating job creation are critical to maintaining growth and protecting the most vulnerable.”
The report noted that while industrial and service sectors showed resilience, agriculture underperformed due to adverse weather, pest infestations, and flood-related damages. Fiscal consolidation and monetary restraint helped anchor inflation and sustain external and fiscal balances amid a difficult global environment.
In the short term, growth is projected to remain around 3 percent in FY26 due to flood-related disruptions. However, the World Bank expects it to rise to 3.4 percent in FY27, contingent on continued macroeconomic stability and structural reforms.
Mukhtar Ul Hasan, lead author of the report, stressed the need for fiscal discipline through tax reforms, divestment of state-owned enterprises, and rationalization of public spending. The report also underscored the importance of boosting exports, which have fallen from 16 percent of GDP in the 1990s to around 10 percent in 2024.
Co-author Anna Twum emphasized that tariff rationalization must be complemented by a market-based exchange rate, better trade logistics, and expanded market access.
The report also unveiled the *World Bank Country Partnership Framework (CPF) FY26–FY35*, focusing on six outcomes, including reduced child stunting, improved education, and enhanced resilience to climate-related disasters—signaling long-term support for Pakistan’s sustainable and inclusive growth agenda.
