Moderate Growth Expected as Inflation Eases and IMF Program Supports Stability
Key Takeaways
• Pakistan’s GDP is projected to grow by 2.3% in 2025, reflecting a cautious but stabilizing economic recovery.
• Inflation has significantly eased, providing relief to consumers and boosting confidence, though structural issues and debt remain constraints.
• Regional growth in South Asia remains strong, but global trade tensions and economic uncertainties pose risks to Pakistan’s export and investment environment.
Money Matters Monitoring – The United Nations has projected Pakistan’s economy to grow by 2.3 percent in 2025, signaling a fragile yet stabilizing recovery after a prolonged period of economic contraction. This forecast comes amid continued fiscal reforms and monetary easing, supported by the International Monetary Fund (IMF) programs aimed at restoring macroeconomic discipline.
According to the UN’s report titled The UN World Economic Situation and Prospects 2025, Pakistan, along with Bangladesh and Sri Lanka, is expected to maintain fiscal consolidation efforts under IMF guidance. The easing inflation rate, which dropped to 0.3 percent in April 2025, has provided some relief to households and boosted consumer and business confidence. However, growth remains modest due to structural challenges, limited fiscal space, and a heavy external debt burden.
Dr. Aneel Salman, Chair of Economic Security at Islamabad Policy Research Institute, described the outlook as “cautious optimism,” emphasizing the need for Pakistan to shift focus from mere stabilization to economic renewal driven by productivity improvements, energy sector reforms, and digital economy advancements.
Regional and Global Economic Context
The report highlights that South Asia’s overall growth is expected to remain robust, with a 5.7 percent expansion forecast for 2025, largely driven by India’s strong performance. However, global economic conditions remain challenging, with slower growth, elevated inflation, and heightened trade tensions affecting Pakistan’s export and investment climate. The global GDP growth forecast has been revised downward to 2.4 percent for 2025, reflecting risks such as tariff increases and geopolitical uncertainties.
Challenges and Opportunities Ahead
Despite the difficulties, Pakistan’s economic resilience offers hope. The IMF program has imposed fiscal tightening that weighs on short-term growth but is crucial for long-term stability. The UN report urges strengthening multilateral cooperation and policy coordination to address global challenges, including trade disruptions and inflation pressures, which disproportionately affect developing economies like Pakistan.
The upcoming Fourth International Conference on Financing for Development, scheduled for June-July 2025 in Spain, is expected to play a vital role in fostering sustainable development financing and international cooperation.
