Pakistan's Macroeconomic Outlook Strengthens: Capital Market Firm Projects Growth

• A capital market firm projects a strengthening of Pakistan's macroeconomic outlook for the current and next fiscal years, aligning with State Bank of Pakistan (SBP) estimates.
• Real GDP is expected to expand by 3.5% in FY26 and 4.4% in FY27, consistent with SBP's projection of 3.75-4.75% growth in 2025-26.
• These growth projections are higher than the International Monetary Fund's 3.2% estimate for Pakistan.
• SBP forecasts the current account deficit to remain within 0-1% of GDP in FY26, with foreign exchange reserves potentially exceeding USD 18 billion by June 2026.
• Inflation is expected to stabilize within the 5-7% target range over the next two years, despite temporary spikes, with S&P projecting 5.1% in 2026 and 5.6% in 2027.

Why It Matters: Pakistan's economy is projected to strengthen with higher GDP growth and stable inflation, despite global risks.