KARACHI: The International Monetary Fund (IMF) is likely to lower its growth estimates for Pakistan’s economy after concluding its ongoing performance review under the $7 billion Extended Fund Facility (EFF) and $1.4 billion Resilience and Sustainability Facility (RSF), economic experts said Tuesday.
The IMF in April’s World Economic Outlook projected Pakistan’s gross domestic product (GDP) to increase by 3.6 percent. It also forecast consumer prices to rise 7.7 percent, the current account deficit to remain at 0.4 percent and unemployment to stand at 7.5 percent in the ongoing financial year.
“The revision [by the IMF] can be expected given the initial assessments on Pakistan’s flood damages,” Sana Tawfik, head of research at Arif Habib Ltd, told Arab News. “There are losses to crops and the livestock.”
However, she refused to share how much the IMF might revise its assessment.
Mahir Binici, IMF’s resident representative to Pakistan, did not respond to questions seeking his comments.
An IMF mission led by its chief Iva Petrova is currently in Pakistan for its review under the EFF and RSF as the South Asian nation assesses the damage from recent floods that killed more than 1,000 people during this year’s monsoon.
The deluge also destroyed homes and farmland across thousands of acres.
If Pakistan clears the end-June 2025 review and meets the agreed policy benchmarks, it will qualify for about $1 billion under the EFF and more than $100 million from the RSF.
“Pakistan’s GDP growth for FY26 is now projected at around 3.2 percent, revised down from our earlier estimate of 3.46 percent, reflecting the impact of recent floods,” said Tawfik, sharing the economic projections of her organization.
“While official damage assessments suggest limited overall losses, the State Bank of Pakistan (SBP) in its latest monetary policy statement noted that floods have dampened the growth outlook,” she added.
Pakistan’s government has also cut its FY26 GDP growth target to 3.9 percent from an earlier 4.2 percent, citing monsoon floods that caused an estimated $1.3 billion in damage, according to a preliminary assessment seen by Arab News.
However, the current figures reflect losses only from Punjab province, with evaluations in Sindh and other regions still underway.
“Given that the review discussions and assessment of the recent floods are still going on, we may see this projection slightly revising downwards in the near future,” Amreen Soorani, head of research at Al Meezan Investment Management Ltd., told Arab News.
Asked how much of a cut she expects from the IMF after the reviews, she said it “will depend on the conclusion of the flood impact assessment.”
Muhammad Waqas Ghani, head of research at JS Global Capital Ltd., said he expected 3.2 percent growth this year.
He agreed the IMF was likely to make “a slight downward revision” in its projections for Pakistan.
“While it is early to assess the impact, Pakistan, being an agrarian country, with direct agriculture contribution to GDP of around 22 percent, could reach a vulnerable position in the aftermath of these floods,” he continued.
The repercussions, Ghani added, may include increased imports, weaker exports and higher inflation.
Pakistan’s finance ministry backed Ghani’s assessment on Tuesday, saying flood-related disruptions may put pressure on food supply chains and push up consumer prices.
“Inflation is expected to rise temporarily but remain contained within the 3.5-4.5 percent range in September 2025,” the ministry said in its monthly economic report.
However, it asserted that economic activity had been “broadly stable” despite the floods.
“The rebound in large-scale manufacturing, supported by encouraging trends in cement dispatches, automobile production and allied industries, indicates strengthening industrial momentum in the months ahead,” the report said, forecasting a “stable” external sector and a “manageable” current account deficit despite stronger import demand.
“Remittances continue to provide strong support, exports are showing early signs of recovery and declining global commodity prices may help ease the import bill,” it added.
Tawfik remained optimistic about Pakistan’s next Rabi crop, which she said looked “stronger” due to expectations of improved post-flood yields.
Meanwhile, Ghani warned of fiscal strain ahead.
“The situation may also put pressure on the fiscal side if the government opts to impose a surcharge or additional tax to cover relief efforts, rehabilitation expenses or potential subsidies for the affected segments,” he added.
