The International Monetary Fund (IMF) has projected Pakistan’s Consumer Price Index (CPI)-based inflation to rise to 6% in the fiscal year 2025–26 — up from 4.5% last year — according to its latest World Economic Outlook (WEO) report released on Tuesday.
The IMF’s forecast indicates a reversal of the global trend, as worldwide inflation is expected to decline to 4.2% in 2025 and 3.7% in 2026. While global growth is projected to slow from 3.3% in 2024 to 3.1% in 2026, Pakistan’s GDP growth is expected to remain unchanged at 3.6% for the current fiscal year.
The report also anticipates a decline in unemployment, projecting it to drop from 8% to 7.5% this year. However, the IMF cautioned that its projections do not yet factor in the economic impact of the recent floods, which caused significant damage to infrastructure and livelihoods.
Earlier this month, Pakistan informed the IMF that flood-related economic losses had reached Rs371 billion, prompting the government to revise its GDP growth target downward from 4.2% to 3.9%.
The report arrives as Pakistan continues its push for an early bailout package with the IMF. Finance Minister Muhammad Aurangzeb, in an interview with Reuters, said that the government was set to sign a preliminary agreement this week, a step toward securing the next $1.24 billion tranche from the lender.
An IMF mission departed Pakistan last week without concluding the staff-level agreement for the second review of the $7 billion Extended Fund Facility (EFF) and the first review of the $1.4 billion Resilience and Sustainability Facility (RSF). Analysts believe that a successful deal could mark a critical turning point for Pakistan’s fragile economy.
