IMF raises Pakistan’s inflation forecast to 9.9% in FY27

Islamabad
Pakistan’s inflation rate is projected to rise to 9.9% in FY2026-27, while economic growth is forecast to remain at 3.5% in the current fiscal year, unchanged from the International Monetary Fund’s (IMF) previous projection, according to the lender’s World Economic Outlook (WEO) report released on Tuesday.
The IMF data showed that inflation is projected to increase to 9.9% in
the current fiscal year from 7.1% in 2025-26.
Pakistan’s gross domestic product (GDP) is projected to grow by 3.5% in this fiscal year, down from 3.6% in 2025.
The country’s current account balance remained unchanged in 2026, and the deficit is expected to reach 1% of GDP in the current fiscal year.
Meanwhile, the report forecasts the unemployment rate to stand at 6.5% in the current fiscal year, down from 6.9% in the previous fiscal year.
Meanwhile, the global economy will still manage to top 3% real GDP growth this year as strong AI investment offsets the energy shock from the war in the Middle East, but downside risks are mounting and more countries are being left behind and vulnerable to rising debt loads, the lender said in its report.
Despite a more protracted conflict that has kept oil prices above $100 a barrel, the IMF is forecasting 2026 global growth at 3.1%, a slight uptick from the 3.0% it predicted in July. For 2027, the IMF predicts 3.4% global growth, flat with the July forecast and up 0.2% from April.
The slight improvement is largely due to continued strong investment in artificial intelligence infrastructure, prompting growth upgrades for key advanced economies building AI platforms and especially for countries supplying AI hardware, including South Korea, Malaysia, Mexico and Thailand, which is hosting the meetings this week.
“The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside,” the IMF’s new chief economist, Silvana Tenreyro, told reporters.
“A prolonged conflict in the Middle East could put additional pressure on inflation and slow down growth. A worsening of fiscal prospects, a reassessment of AI profitability, and extreme weather events could further weaken the outlook,” she added.
Among major economies, the IMF forecast US growth of 2.3% for both 2026 and 2027, unchanged for this year and 0.1% higher for next year. The US economy is expected to be supported by robust private consumption, tax cuts and AI investment, though the boost from AI will be offset by its large import content.
Eurozone growth for 2026 was upgraded to 1.1% from 0.9% in July due to stronger investment in AI, participation in AI value chains such as chemical production in Germany, and higher defence spending in EU countries. Britain’s 2026 growth forecast was also upgraded by 0.3% from July to 1.3% due to larger AI investment.