The World Bank expects Pakistan's economy to grow by 3.8% during the current fiscal year under a baseline scenario. Government targets for the same period are set at 4% growth.
Projections for the election year indicate a growth rate of 4.4%, while the year preceding the 2029 national elections is expected to see 4.2% growth. The World Bank also forecasts 4.2% economic growth for the 2027-28 fiscal year.
Bolormaa Amgaabazar, World Bank Country Director for Pakistan, stated, "Pakistan has made real progress in restoring stability and markets have taken notice." Amgaabazar noted that real per capita growth remains stagnant at approximately 1.6%.
The poverty rate in Pakistan rose from 22% in 2019 to 29% in 2025. With 3.6 million people entering the Pakistan market annually, Sebastian Essl, Lead Author of the report, said, "The growth rate in the medium term does not seem going beyond 4.5%, which is too low to create enough jobs."
The World Bank identified a prolonged and intense conflict in the Middle East as the most significant risk to the country's near-term macroeconomic outlook. The institution projected that the economy will be affected by the Middle East conflict through the end of 2026.
The current International Monetary Fund programme is projected to conclude in September 2027. The World Bank stated that developing and effectively implementing a medium-term fiscal plan that preserves macroeconomic stability is critical to maintaining confidence as the IMF programme ends and national elections approach.
External financing needs are estimated to average around 5% of GDP over the near term. The World Bank projected the current account deficit to widen this fiscal year, though it expects remittances to offset the gap.
The real effective exchange rate (REER) appreciated by 10% between the end of June 2025 and July 2026. The average exchange rate in FY26 was Rs280.4 per dollar, compared to Rs279.4 per dollar in the previous year.
The World Bank projected the standard deviation of the exchange rate to be about 0.6% of its longer-term average. The World Bank projected the standard deviation of the exchange rate to be below Rs2 over the past two fiscal years.
The World Bank stated, "The central bank exchange rate intervention creates temporary stability but leads to disruptive adjustments, deterring investment and undermining confidence." The World Bank noted, "Stability in the face of these shocks suggests that the exchange rate is not responding freely to market conditions. A fully flexible, market-determined exchange rate would better serve Pakistan's economic development needs: it would buffer external shocks, support private sector confidence and prevent a gradual erosion of competitiveness."
Growth could drive sustained growth of up to 6.2-6.9% per annum if Pakistan follows ambitious economic reforms. Tighter global financial conditions could potentially raise borrowing costs.
