ISLAMABAD: The Asian Development Bank (ADB) has revised Pakistan’s economic growth forecast downward to 3.7 per cent for the new fiscal year, placing the country among the lowest-growing economies in South Asia.
At the same time, it has raised its inflation forecast to 8.3 per cent.
According to the ADB’s latest Asian Development Outlook report, Pakistan’s projected growth rate is now the third lowest in South Asia after Afghanistan and the Maldives. Inflation, meanwhile, is expected to remain the second highest in the region after Bangladesh.
The report also warned that Pakistan is among the countries whose exports to the United States could face additional tariffs ranging from 10 to 12.5 per cent from July 24, 2026.
ADB attributed the downgrade in Pakistan’s growth outlook to rising energy costs, pressure on workers’ remittances and the adverse economic impact of ongoing tensions in the Middle East.
Pakistan’s economy also expanded by 3.7 per cent in the previous fiscal year. In April this year, the ADB had projected the country’s growth at 4.5 per cent but has now reduced the estimate by nearly one percentage point.
The bank said inflation is expected to climb to 8.3 per cent because of the regional situation in the Middle East. Bangladesh is projected to record the highest inflation in South Asia at 8.8 per cent.
According to the report, Pakistan faces greater economic challenges than Afghanistan, Bhutan, the Maldives, Nepal and Sri Lanka.
ADB further cautioned that under the new US trade policy, exports from Pakistan and around 60 other countries could be subjected to additional tariffs of 10 to 12.5 per cent.
The report noted that developing economies across Asia and the Pacific are among the hardest hit by US trade restrictions, with the average effective tariff rate reaching 24.8 per cent, almost double the level before April 2025.
Meanwhile, Pakistan’s Ministry of Commerce said the country has already banned the import of goods produced through forced labour. It added that a Pakistani delegation is currently in the United States to negotiate and seek relief from the proposed tariffs before they come into effect on July 24.
