Washington, D.C. – The International Monetary Fund (IMF) has forecasted a rise in Pakistan’s inflation rate, projecting a Consumer Price Index (CPI)-based inflation of 6% for the fiscal year 2025-26. This increase comes after the inflation rate was recorded at 4.5% in FY2025, signaling a further strain on the country’s economy in the near term.
The IMF made this projection in its latest World Economic Outlook (WEO) report released on Tuesday, which also highlighted global inflation trends. While global inflation is expected to decrease from 4.2% in 2025 to 3.7% in 2026, Pakistan’s inflationary pressures are expected to persist, surpassing the global average.
In addition to inflation, the IMF maintained its economic growth forecast for Pakistan at 3.6% for FY2025-26, unchanged from its earlier projections. The report also noted that Pakistan’s unemployment rate is expected to improve, with a slight reduction to 7.5% in FY2025 from 8% in the previous fiscal year.
However, the IMF report acknowledged that its forecasts did not account for the potential impact of recent floods, which have caused significant damage to Pakistan’s infrastructure and agricultural sectors. The country has already reported economic losses amounting to Rs371 billion due to the floods, with the government revising its GDP growth target downward from 4.2% to 3.9% for the current fiscal year.
The IMF’s outlook comes at a critical time as Pakistan continues negotiations with the global lender for a review of its loan program. Finance Minister Muhammad Aurangzeb confirmed that a preliminary deal on the review of Pakistan’s IMF program is expected to be signed this week, which will pave the way for the release of an additional $1.24 billion bailout payment.
While the IMF’s projections remain largely unchanged, the country’s economic outlook remains fragile, particularly in the wake of natural disasters and ongoing fiscal challenges.
