ADB upgrades Pakistan’s growth prospects to 3% in FY2025
ISLAMABAD: The Asian Development Bank (ADB) has revised Pakistan’s growth forecast for the fiscal year 2024-25 upwards to 3.0%, compared to its previous projection of 2.8% in September 2024.
The revision reflects improved macroeconomic stability following the approval of a new International Monetary Fund (IMF) program under the Extended Fund Facility in September. The report highlights that the recovery is expected to be bolstered by accelerated industrial output growth due to the lifting of import restrictions, enhanced investor confidence, and easier access to foreign exchange.ADB Approves $320 Million Loan for Road Projects in KP
Additionally, a more accommodative monetary policy, driven by a faster-than-expected reduction in inflationary pressures, is projected to stimulate economic activity through a rebound in private investment.
However, the agriculture sector is expected to underperform due to heavy monsoon rains during July–September 2024, which caused flood-like conditions in some regions. Major crops like wheat and cotton are anticipated to experience poor yields in FY2025.
The Asian Development Outlook for December 2024 also upgraded Pakistan’s growth forecast for FY2024 to 2.5%, aligning with updated official estimates.
In South Asia, the ADB revised its growth forecasts downward to 5.9% for 2024 and 6.3% for 2025. The adjustments reflect India’s weaker-than-expected Q2 growth due to subdued manufacturing and slower government spending.
Conversely, Pakistan and Sri Lanka’s growth projections were upgraded due to their recovery from the macroeconomic challenges of 2022–2023. However, Bangladesh and the Maldives saw downward revisions for 2024 and 2025, attributed to political unrest in Bangladesh during July–August 2024 and fiscal consolidation efforts in the Maldives. Nepal’s 2025 growth projection also weakened slightly.
For developing Asia, the ADB trimmed its growth forecast to 4.9% for 2024 and 4.8% for 2025. The revisions reflect weaker-than-expected growth in East and South Asia, offsetting stronger performance in the Caucasus, Central Asia, and Southeast Asia.
Despite these adjustments, domestic demand across much of the region remains strong, and exports continue to support growth, albeit at a moderated pace. The report warns of downside risks, including unexpected policy shifts in the US, escalating geopolitical tensions, and a further weakening of China’s property market.
The ADB also notes that significant changes under the new US presidential administration could have implications for the region, with most of the impact expected beyond the forecast horizon.
