ADB holds Pakistan growth at 3.7pc for FY27 and lifts inflation to 8.3pc

The Asian Development Bank published its September Asian Development Outlook on Wednesday and left Pakistan's growth forecast for FY27 unchanged at 3.7 per cent, below the 4 per cent the government wrote into the budget. The bank also raised its inflation call for the year to 8.3 per cent, above the State Bank's 5 to 7 per cent medium term target range.

That pairing is the whole story: the economy is expected to grow at the same modest pace as last year while prices climb faster than the central bank wants.

The numbers, side by side

• FY27 growth: 3.7pc (government budget target: 4pc)
• FY27 average inflation: 8.3pc (SBP medium term target: 5pc to 7pc)
• FY26 growth outcome: 3.7pc, up from 3.2pc in FY25
• FY26 average inflation: 7.1pc, up from 4.5pc in FY25
• FY26 agriculture growth: 2.9pc, achieved despite flood losses
• FY26 private investment: up 8.6pc

Pakistan's own most recent CPI reading, for August, came in at 11.1pc year on year, which is already well above the ADB's full year average. You can see the series on our inflation data page. An 8.3pc average for the year implies the monthly prints cool in the second half.

What 8.3pc inflation does to your money

A salary that does not move loses 8.3pc of its purchasing power over the year on the ADB's number. On a Rs 150,000 monthly take home, that is roughly Rs 12,450 a month of lost buying power by the end of FY27 unless the increment matches it. Our salary increment calculator shows what a given raise is worth once inflation is taken out.

For savers, the reference point is the policy rate, held at 11.5pc (see our policy rate page). Against 8.3pc expected inflation that leaves a positive real return on rupee deposits and National Savings schemes, which is a change from the 2023 and 2024 years when inflation ran ahead of deposit rates. Our National Savings calculator works out the profit on each scheme.

The risks the bank names

The ADB lists escalation in the Middle East, which would push up energy costs and put remittance flows from Gulf labour markets at risk, government austerity dampening domestic demand, tighter global financing conditions, tax revenue shortfalls, weather shocks to agriculture, and delays in energy and state-owned enterprise reform.

The Middle East line matters twice over for Pakistan: once through the oil import bill, and again through the roughly one in three remittance rupees that come from Saudi Arabia and the UAE. Brent has been falling on US and Iran talks, which cuts the other way, and that has already fed into this month's fuel price cut.

What to watch next

The IMF mission is in Islamabad for the review tied to a $1.2bn tranche, and its own projections will land within weeks. Where the two differ, the gap is usually on revenue. For households the near term read is simpler: petrol is down, diesel is down, and the August CPI print is the number to watch on 1 October.