ADB Warns Flood Risks Threaten Pakistan’s Economic Growth
Islamabad — The Asian Development Bank (ADB) has cautioned that recurring natural disasters, particularly floods, continue to threaten Pakistan’s economic stability despite signs of recovery.
In its latest Asian Development Outlook report, the ADB projected Pakistan’s GDP growth to hover around 3% in FY2026, with inflation expected to average 6%. The Bank linked inflationary pressure to supply chain disruptions, higher food costs, and rising gas tariffs.
The report noted that Pakistan’s economy gained some ground in 2025 under the IMF reform program, supported by policy measures and improved macroeconomic stability. It also forecast further strengthening of foreign exchange reserves and increased investment inflows, with a possible lift in business confidence from a Pakistan-US–US trade deal anticipated in FY2026.
ADB Country Director Emma Fan described Pakistan’s medium-term outlook as “positive,” but cautioned that structural challenges remain. She stressed that repeated floods and other natural disasters could undermine infrastructure, agriculture, and food security.
At the same time, the report highlighted that government incentives for the construction sector could help soften the economic impact of recent floods. Meanwhile, the State Bank of Pakistan is expected to maintain a cautious monetary policy to keep inflation under control.
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