IMF downgrades Pakistan’s GDP growth forecast for 2025 to 3%

The International Monetary Fund (IMF) has revised Pakistan’s economic outlook, downgrading its projected Gross Domestic Product (GDP) growth for 2025 to 3%, down from 3.2% forecasted just three months ago.

The adjustment comes amid a broader global economic assessment presented in the IMF’s “World Economic Outlook Update: Global Growth – Divergent and Uncertain.”

The IMF’s revised projections also indicate that Pakistan’s GDP growth will remain at 4% in 2026. However, the latest downgrade reflects ongoing economic challenges in the country, although the IMF did not provide specific reasons for the revision.

This latest revision mirrors the forecast made by the Asian Development Bank (ADB) last month, which also adjusted Pakistan’s growth forecast to 3% for the fiscal year 2024-25, up from a previously projected 2.8%.

Both institutions have cited challenges faced by Pakistan’s economy but have maintained a cautiously optimistic outlook for the medium-term.

Global Economic Growth Forecasts

Globally, the IMF forecasts a global growth rate of 3.3% for both 2025 and 2026, slightly below the historical average of 3.7%.

The IMF’s chief economist, Pierre-Olivier Gourinchas, highlighted that the global economy continues to face diverging growth patterns, with stronger-than-expected performance in the United States partially offsetting weaker results in other major economies.

Inflationary trends are expected to ease in the coming years, with the IMF projecting global inflation to decline to 4.2% in 2025 and 3.5% in 2026. However, the IMF cautioned that inflation remains stubbornly high in some regions, despite a global trend of disinflation.

The IMF also noted a significant decrease in energy commodity prices, with a forecasted 2.6% decline in 2025, while non-fuel commodity prices are expected to rise by 2.5%, largely due to adverse weather conditions affecting key producers.

Regional and Major Economies’ Growth Projections

The IMF’s global outlook includes more optimistic projections for some major economies. In the United States, GDP growth is expected to reach 2.7% in 2025, revised upward by 0.5 percentage points due to stronger domestic demand. However, U.S. growth is forecast to slow to 2.1% in 2026.

In contrast, the euro area is facing a weaker economic trajectory, with growth projected at 1% for 2025, down from an earlier estimate of 1.2%.

This downward revision reflects slower-than-expected momentum, particularly in manufacturing, and ongoing political and policy uncertainties. The IMF anticipates a recovery in 2026, with growth expected to rise to 1.4%.

The United Kingdom is projected to see modest growth, with an estimated 1.6% increase in 2025 and 1.5% in 2026.

Meanwhile, China’s GDP is expected to grow at 4.6% in 2025 and 4.5% in 2026, with the IMF urging China to boost domestic demand to support its economic expansion.

India, on the other hand, continues to show robust growth, with the IMF projecting a solid 6.5% GDP increase in both 2025 and 2026, in line with its potential.

As the IMF’s outlook suggests, the global economy remains in a period of uncertainty, with divergent growth paths across regions.