IMF projects Pakistan’s inflation to rise to 6% in FY26

The International Monetary Fund (IMF) has projected Pakistan’s Consumer Price Index (CPI)-based inflation to rise to 6% in the 2025–26 fiscal year, up from 4.5% last year. 

The global lender released its latest World Economic Outlook (WEO) on Tuesday, expecting that inflation in the country was likely to increase from 4.5% in FY25 to 6% in the ongoing fiscal year.

Globally, inflation is projected to decline to 4.2% in 2025 and to 3.7% in 2026.

While the IMF projected global growth to slow down from 3.3% in 2024 to 3.1% in 2026, it kept Pakistan's economic growth unchanged at 3.6% for the ongoing FY2025-26.

Meanwhile, the IMF stated that the unemployment rate in Pakistan is projected to decline during the current fiscal year.

According to projections, the unemployment rate in the country is likely to come down to 7.5% from last fiscal year's 8%.

The IMF, however, stated that its forecasts did not take into account the impact of recent floods, which were still being assessed.

Earlier this month, Pakistan apprised the IMF of economic losses to the tune of Rs371 billion in the aftermath of floods.

The government also projected a downward revision of the economic target by 0.3 percentage points, bringing its earlier GDP growth target of 4.2% to 3.9%.

The projections about Pakistan's macroeconomic indicators come as the country is pushing for an early bailout programme with the IMF.

In an interview with Reuters earlier today, Finance Minister Muhammad Aurangzeb said that Pakistan was set to sign a preliminary deal on a review of its programme with the IMF this week.

The development is considered a major step in the country's effort to secure another $1.24 billion payout from the lender.

An IMF mission left Pakistan last week without signing a staff-level agreement on the second review of the Washington-based lender's $7 billion Extended Fund Facility and the first one on its $1.4 billion Resilience and Sustainability Facility.