ISLAMABAD: Pakistan’s economy grew by 3.7 percent in 2026, according to the World Bank’s latest Pakistan Development Update. The report paints a mixed picture, with steady expansion alongside persistent cost pressures for households.
Average core inflation in urban areas was recorded at 7.4 percent during the 2025-26 fiscal year, while the overall fiscal deficit narrowed to 2.6 percent of gross domestic product.
The Bank detailed a sharp run up in energy costs between February and June 2026. Petrol prices climbed around 36 percent, high speed diesel rose 31 percent and liquefied petroleum gas jumped about 46 percent over that period. Transport fares also increased by roughly 30 percent.
On the brighter side, the report noted that S&P Global Ratings and Moody’s had both upgraded Pakistan’s credit ratings, a signal that international lenders see improvement in the country’s assessment.
The update reinforces the challenge facing policymakers: keeping inflation in check while sustaining the growth momentum that has supported the economy this year.
