The International Monetary Fund has projected Pakistan’s economy to grow at 3.5 per cent for the current fiscal year, which is 0.5 per cent lower than the government’s target of 4 per cent.

In its latest World Economic Outlook (WEO) update released on Wednesday, the IMF also retained its forecast of 3.6% GDP growth for Pakistan in fiscal year 2025-26, unchanged from its projections issued in April.

According to the report, Pakistan’s economy expanded by 3.2% in 2025 and is expected to grow by 3.6% in 2026 before moderating slightly to 3.5% in 2027.

Globally, the IMF projected economic growth of 3.0% in 2026 and 3.4% in 2027, broadly unchanged from its April outlook.

The Fund said the global economic outlook remains uneven, with the impact of ongoing conflict weighing on energy-importing and vulnerable economies, while rising demand linked to artificial intelligence continues to benefit countries integrated into global technology supply chains.

The report also warned that global disinflation has stalled, although risks are more balanced than in April.

It cautioned that renewed geopolitical conflict and financial market volatility remain key downside risks and urged policymakers to maintain price stability, rebuild fiscal buffers and strengthen economic resilience.