World Bank forecasts 3.2% GDP growth in FY26, below official estimates

• Global Economic Prospects points out industrial sector activity.
• Improvement current account balances because of remittances. 
• Current account deficit to to widen in FY27, due to import demand.

ISLAMABAD: The World Bank (WB) has projected Pakistan's GDP growth rate at 3% for the current fiscal year, down from official estimates of 4.2%, The News reported on Wednesday.

The Global Economic Prospects released by the WB says that in Pakistan, growth rate is expected to remain at 3% in FY2025/26 (July 2025 to June 2026) and then increase to 3.4% in FY2026/27, with a recovery of agricultural production and reconstruction following a series of floods in 2025.

According to the report, another upside risk is a further commitment to implementing growth-enhancing structural reforms.

In Morocco and Pakistan, the implementation of deeper-than-anticipated regulatory reforms to promote private sector activity could boost growth, reduce informality and create jobs.

In Pakistan, a relaxation of import restrictions and an expansion of bank credit, stemming partly from easing financial conditions, have contributed to the strengthening of activity, particularly in the industrial sector.

Among oil importers, current account balances have improved in Morocco, Pakistan and Tunisia, partly because of increases in remittances and tourism revenues.

In several oil-importing countries, particularly Pakistan and Tunisia, further increases in US tariffs could lead to notable declines in exports.

In addition, economies with a more concentrated export destination structure would be more vulnerable to trade-related shocks.

However, in Pakistan, a current account deficit is projected to widen in FY2026/27, with a rise in import demand, alongside the strengthening growth and post-flood normalisation of remittance growth, and post-flood normalisation of remittance inflows.