Pakistan Projects Inflation to Rise to 7.5% in FY26 Amid Economic Adjustments

The government has forecasted an average inflation rate of 7.5% for fiscal year 2025-26, marking an increase from the 5% inflation rate recorded in the current fiscal year. Officials attribute the rise to easing import restrictions, increased debt repayments, and external sector pressures.

Key Economic Projections:
Inflation: Expected to reach 7.5% in FY26.

GDP Growth Target: 4.2%, up from 2.68% in the outgoing fiscal year.

Public Investment: Projected to rise from 2.9% to 3.2%.

Private Investment: Expected to increase from 9.1% to 9.8% of GDP.

External Sector Challenges:
The Ministry of Planning warns that relaxation of import controls and debt repayments could widen the current account deficit. However, strong remittances, export recovery, and anticipated external financing may help cushion these pressures.