Pakistan’s GDP is expected to increase by 2.8% in FY2025, according to Asian Development Bank (ADB) projections, supported by a rebound in private investment.
Economic changes under the three-year International Monetary Fund (IMF) Extended Fund Facility (EFF) are anticipated to accelerate growth and lower inflation, according to the Asian Development Bank (ADB) in its Asian Development Outlook (ADO) for September 2024.
Pakistan’s GDP grew by 2.4% in FY2024, mostly as a result of higher consumption brought on by the government’s efforts to stabilise and restructure the economy. As interest payments exceed 60% of fiscal income, the ADB warned that risks remain significant even though it projects a reduction in public debt by 2024. The ADB has also increased to 5.0% its growth estimate for developing Asia and the Pacific.
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Pakistan’s economic growth has been primarily driven by a number of factors:
- Agriculture Sector:
This industry has grown significantly, especially in important products like cotton, rice, and wheat. Given that it provides employment for a sizable section of the population and makes a substantial contribution to GDP, the agriculture sector’s success is vital.
- Industrial Sector:
There has been noticeable growth in both industry and construction. The growth of the industrial sector is fuelled by rising production and infrastructural development.
- Services Sector:
This industry, which contributes significantly to the GDP, encompasses banking, retail, and telecommunications. Its steady expansion has been crucial to the stability of the economy as a whole.
- Government Policies:
Growth has been aided by prudent policy management, which includes initiatives to enhance the business climate, control inflation, and implement macroeconomic stabilisation measures.
- External Factors:
Resuming foreign partner inflows and key trading partner recoveries have also bolstered economic growth.
- Investment and Trade:
The government hopes to further stabilise and expand the economy by focussing on enhancing trade and investment openness and implementing sector-specific reforms.
These factors collectively contribute to the projected economic growth of 2.8% in FY2025.