The World Bank’s Pakistan Development Report 2025 has warned that inflation in Pakistan is likely to rise due to the devastating impact of recent floods on the national economy. The report projects inflation at 7.2% for the current fiscal year and 6.8% for the next, emphasizing that while economic growth has improved slightly, significant challenges remain.
According to the report, Pakistan’s GDP grew by 3% in 2025, up from 2.6% last year, driven by growth in industrial and service sectors, while agriculture continued to face pressure. Fiscal discipline has helped contain inflation, and growth is forecast to reach 3.4% by 2027.
However, the World Bank cautioned that tariff reforms alone will not be sufficient to boost exports. It urged the government to prioritize export growth, fully implement the National Tariff Policy, and focus on expanding remittances to bridge the trade gap.
The report also underscored the need for tax base expansion, public sector reforms, and privatization to sustain stability. With 1.6 million young people entering the job market annually and poverty projected at 21.5%, the World Bank emphasized that stronger economic growth and structural reforms are essential to improve living standards and ensure long-term resilience.
