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Summary:

A recent IMF report projects that Pakistan’s economy has achieved short-term stability, but is burdened by high debt, weak investment, and slow employment growth. Economic growth is projected to barely outpace population growth, leading to little improvement in per capita income. Inflation is expected to fluctuate, and unemployment will see only a modest decline. While government revenue is expected to increase, the public debt burden remains high and foreign investment low. The IMF has approved a fresh disbursement of $1.2 billion, but the report cautions that Pakistan is on a narrow path to stability, facing challenges in achieving sustained and inclusive economic growth.

News Article:

Pakistan’s Economy Faces Stabilization Challenges Despite IMF Aid, Report Says

Islamabad, December 10, 2025 – Pakistan’s economy has achieved short-term stability but continues to grapple with significant challenges, according to a new report released by the International Monetary Fund (IMF). While the IMF has approved a disbursement of $1.2 billion, the report paints a picture of an economy burdened by high debt, weak investment, and slow job creation.

Economic growth is projected to inch up from 2.6% in FY-25 to 3.2% in FY-26, which is a rate barely ahead of the country’s population growth of over 240 million. This translates to little improvement in the country’s per capita income, currently at $1,677.

“The immediate risk of economic free fall has eased, but the country remains locked into a narrow stabilisation path marked by weak growth, heavy debt and limited relief for households,” the report stated.

Inflation, which averaged 23.4% in FY-24, is estimated to have fallen sharply to 4.5% in FY-25, but is projected to rise again to 6.3% in FY-26. Unemployment is expected to fall only slightly, from 8.3% to 7.5%, highlighting the lack of job creation capacity.

The report highlighted the heavy public debt burden, projected to hover around 72-73% of GDP. Foreign direct investment (FDI) remains low, projected at just 0.5-0.6% of GDP.

While the IMF report acknowledges a shift towards currency stability, it cautions that translating stabilisation into sustained, inclusive growth remains a significant challenge for Pakistan.

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