World Bank has issued Pakistan Development Outlook report, forecasting a bleak picture for the economy in the coming years.

According to World Bank, the economy’s growth rate will remain below 3% until 2026.

The growth rate is expected to remain 1.8% in 2023/24, 2.3% in 2024/25 and 2.7% 2025/26.

“Under current policy settings, and unless a major structural reform program is durably implemented, growth is expected to remain muted amid continued very low investment, persistent external imbalances (likely necessitating continued import and capital management measures), distortionary fiscal policies, and a large state presence in the economy,” the report said.

However, the current account deficit is likely to remain largely stable, at 0.7% in 2023/24 and 0.6% in the next two years.

The fiscal deficit will decline slightly from 8% this year, to 7.4% next year and 6.6% in 2026.

Industrial growth will stay at 1.8% this year and will rise to 2.2% next year and eventually to 2.4% in 2026.

However, the report carried good news on the inflation front, forecasting the rate to come down from 26% this year, to 15% in 2025 and 11.5% in 2026.

“A clearly articulated, ambitious, and credible economic reform agenda is required toreduce uncertainty and restore confidence,” the World Bank said.

“Risks remain very high, and key policy constraints to sustainable economic growth remain unaddressed. Policy buffers to manage any shocks remain depleted, with high levels of debt and tightly constrained foreign exchange reserves,” the report added.