Pakistan risks locking itself into a prolonged phase of economic stagnation, warned economist Asad Ali Shah, as the World Bank’s latest update projects growth at just 2.6% for FY25-26 — following a dismal four-year stretch of weak performance.
Expressing his views on the social media platform X, Asad, the former president of the Institute of Chartered Accountants Pakistan (ICAP), said: “The World Bank’s latest Pakistan Development Update has revised down the FY25-26 growth forecast to just 2.6%, compared to the government’s more optimistic projection of around 4%.
“This comes after three years of dismal performance — -0.2% in FY23, 2.5% in FY24, and 2.7% in FY25 — marking what is arguably the worst four-year stretch in Pakistan’s economic history, defined by sustained low growth, record inflation and interest rates, and a collapse in investment confidence.”
As per the World Bank’s latest projections, Pakistan’s economy is projected to grow modestly by 2.6% in FY2025-26, as catastrophic floods weigh on agricultural output and inflation pressures resurface.
The report further noted that Pakistan’s inflation rate dropped to single digits in FY 2024/25, as price increases for food and energy eased. “However, disruption to food supply chains, due to ongoing catastrophic floods, is expected to push inflation up through 2027,” it projected.
Former Federal Finance Minister Miftah Ismail also echoed similar views, saying that “in terms of growth, these FY22-23 to FY25-26 are the worst four years in Pakistan’s history.”
Miftah criticised the government for avoiding key reforms, including privatisation, downsizing ministries, and strengthening local governance, arguing that authorities are instead “purchasing stability through low growth” by keeping interest rates, taxes, and utility tariffs high.
“The result is: increased unemployment, poverty and political alienation.”
Meanwhile, Asad maintained that Pakistan’s economy “may have stabilised — but it has not recovered”.
The economist pointed out that industrial output remains weak, whereas “agriculture is in deep crisis amid climate shocks and policy distortions, and job creation has stalled”.
“Stability is not success,” he stressed, warning that without credible reforms to restore investor confidence, strengthen governance, and shift resources toward productivity and exports, Pakistan risks institutionalising stagnation as its new normal.
