ISLAMABAD: The International Monetary Fund (IMF) has issued a stern warning regarding Pakistan’s economic trajectory, cautioning that rising inflation and a widening current account deficit could derail the country’s fragile recovery despite a moderate growth forecast.
In its October 2025 World Economic Outlook, the IMF projected Pakistan’s GDP growth at 3.6 percent, slightly above earlier expectations. However, the optimism was tempered by a sharp uptick in inflation — expected to climb to 6 percent, compared to last year’s 4.5 percent — and a current account deficit of 0.4 percent of GDP, reversing the previous year’s surplus.
The Fund also cautioned that its projections do not account for the full economic fallout from the recent floods, which are likely to put additional pressure on prices, imports, and fiscal resources. Policymakers were urged to act swiftly to manage these vulnerabilities before they spiral into a broader crisis.
The IMF stressed that Pakistan must reinforce fiscal discipline, pursue structural reforms, and maintain a credible monetary policy to anchor inflation expectations. It also highlighted the need for predictable regulatory frameworks and climate resilience measures to stabilize the economy in the long term.
On the global front, the IMF forecasted that overall economic growth will ease to 3.2 percent in 2025 and 3.1 percent in 2026, citing weakening trade, high debt levels, and policy uncertainty as key factors dampening recovery across developing economies.
Analysts warn that Pakistan’s economic outlook remains deeply intertwined with external support, governance reforms, and political stability — all of which will determine whether the country can avoid another cycle of economic distress.
This story has been reported by PakTribune. All rights reserved.