Illustration of a declining inflation graph with Pakistan’s landmarks and a sunrise, representing the country’s shift toward economic stability.

May 30, 2025
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IMF forecasts Pakistan’s inflation to stay in single digits for six years, signaling economic stability ahead

The International Monetary Fund (IMF) has delivered a cautiously optimistic outlook for Pakistan’s economy, projecting that inflation will remain in single digits for the next six years. This marks a significant turnaround from the double-digit inflation rates that have plagued the country in recent years and signals a potential era of economic stability and growth for Pakistan.

Key Highlights from the IMF Forecast

Single-Digit Inflation Ahead:
The IMF expects Pakistan’s average inflation rate to be around 5.6% for the current fiscal year, with forecasts of 7.7% for 2025-26 and 6.5% for the following years up to 2029-30.
Sharp Decline from Previous Years:
Inflation averaged 29.2% in 2022-23 and 23.4% in 2023-24, but has now dropped to just 4.73% in the first ten months of the current fiscal year.
Economic Growth Outlook:
The IMF projects GDP growth of 2.6% to 3.2% for 2025, with expectations of further improvement in subsequent years.
Policy-Driven Stability:
The positive outlook is attributed to tight monetary and fiscal policies, a market-based exchange rate, and ongoing structural reforms.

Why Is This Forecast Important?

Signals Economic Stability:
Sustained low inflation is a sign that Pakistan’s economy is stabilizing after years of volatility.
Boosts Investor Confidence:
Predictable inflation rates can attract both domestic and foreign investment, supporting job creation and development.
Improves Purchasing Power:
Lower inflation means less pressure on household budgets, especially for food and fuel, which have been major pain points in recent years.
Supports Policy Reforms:
The IMF’s outlook is contingent on the government’s continued commitment to fiscal discipline, structural reforms, and protection of vulnerable populations.

Challenges and Caveats

Policy Continuity Needed:
The IMF stresses that these positive trends depend on the government’s ability to maintain strict fiscal targets and continue with reforms.
Global and Domestic Risks:
Geopolitical tensions, global commodity prices, and domestic political uncertainty could still pose risks to the inflation outlook.
Ongoing IMF Engagement:
Recent budget talks between Pakistan and the IMF have been challenging, highlighting the need for consensus on relief measures and fiscal discipline.