The Asian Development Bank (ADB) has kept Pakistan’s economic growth forecast unchanged at 3.7% for the current fiscal year while projecting inflation at 8.3%, marginally above the government’s estimate.
In its July 2026 Asian Development Outlook (ADO), released on Thursday, the lender also revised down its economic growth forecast for developing Asia and the Pacific to 4.9% in 2026, down from 5.5% in 2025. The new estimate is 0.2 percentage points lower than the projection issued in April.
According to the report shared on X, the prolonged impact of the Middle East conflict on global energy markets has weakened the region’s economic prospects more than previously anticipated. However, the ADB maintained its 2027 regional growth forecast at 5.1%, expecting economic activity to recover gradually as market pressures ease.
ADB has revised its growth forecast for developing Asia and the Pacific due to prolonged market disruptions from the Middle East conflict.
Read the latest #ADO2026 report: https://t.co/LSlgyzVipo pic.twitter.com/X3BMJyXRcu
— Asian Development Bank (@ADB_HQ) July 8, 2026
The report noted that despite a framework agreement reached in June, disruptions in global energy supplies are expected to subside only slowly. Rising costs have also spread beyond energy to fertilisers, commodities and supply chains, increasing inflationary pressures across the region.
Regional inflation is now expected to average 4.3% in 2026, up from 3% in 2025 and 0.7 percentage points higher than the ADB’s April forecast. The inflation outlook for 2027 remains unchanged at 3.4%.
ADB Chief Economist Albert Park said the successful implementation of the June framework agreement could help stabilise global energy markets, but warned that the pace of recovery remains uncertain and downside risks persist.
He added that while developing Asia and the Pacific continue to show resilience, policymakers must strike a careful balance between sustaining economic growth and controlling inflation amid ongoing geopolitical challenges.
The ADB cautioned that any renewed escalation in regional conflicts or prolonged geopolitical tensions could further disrupt energy markets, increase financial risks and intensify inflationary and external economic pressures.
The report also highlighted tighter global financial conditions as a significant concern, noting that rising sovereign bond yields, higher borrowing costs and widening fiscal deficits could weigh on several economies.
Additional risks include higher trade tariffs and continued uncertainty over global trade policies, which could curb economic activity. At the same time, elevated fertiliser prices remain a threat to agricultural production and food security.
For 2026, the ADB lowered growth projections for most subregions, except for developing East Asia. It left its forecasts for China unchanged at 4.6% in 2026 and 4.5% in 2027, supported by robust exports and infrastructure investment.
India’s growth forecast for 2026 was revised downward to 6.6% due to the impact of higher energy costs on domestic demand, while its 2027 projection remained unchanged at 7.3%.
Economic forecasts for Southeast Asia and the Pacific were also reduced, reflecting weaker domestic demand, slower tourism recovery, rising inflation and higher import costs.
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