World Bank cuts Pakistan’s growth forecast to 2.6 percent amid flood devastation

A man and workers are seen at a spice and grocery shop in a market in Karachi, Pakistan, on June 10, 2025. (REUTERS/File)
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Updated 08 October 2025
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World Bank cuts Pakistan’s growth forecast to 2.6 percent amid flood devastation

  • Monsoon floods in Pakistan have damaged crops, homes and infrastructure while affecting millions
  • Bank says economic recovery will depend on agricultural rebound and lower inflation in coming years

ISLAMABAD: The World Bank on Tuesday projected Pakistan’s economy to grow by 2.6 percent in the ongoing fiscal year (FY2025/26), lowering its earlier estimate due to the recent monsoon floods that inundated large parts of Punjab and Khyber Pakhtunkhwa, damaging homes, infrastructure and farmland.

The monsoon season, which began in late July, has claimed at least 1,037 lives in incidents including roof collapses, landslides and flash floods.

Punjab, the country’s agricultural heartland, experienced one of its worst floods in years after neighboring India released excess water into three major rivers, affecting millions of people across the province.

“In Pakistan, real GDP at factor cost is expected to have grown by 2.7 percent year-on-year in FY 2024/25, slightly above FY 2023/24’s 2.5 percent expansion,” the World Bank said in its Regional Economic Outlook for the Middle East, North Africa, Afghanistan and Pakistan (MENAAP). “For FY 2025/26, real GDP growth is projected to remain around 2.6 percent, as ongoing catastrophic floods have damped the forecast.”

Earlier this year, the Bank had projected 3.1 percent growth for Pakistan before the monsoon season.

“Early estimates suggest a drop of at least 10 percent in agricultural output in Punjab, affecting major crops such as rice, sugarcane, cotton, wheat, and maize,” the report said. “For FY 2026/27, growth is expected to accelerate to 3.4 percent, supported by higher agricultural output, lower inflation and interest rates, recovering consumer and business confidence, and a rebound in private consumption and investment.”

Pakistan has been striving to recover from a prolonged economic crisis that brought it to the verge of default in mid-2023, when it secured a short-term $3 billion International Monetary Fund (IMF) loan.

Since then, the country has undertaken stringent reforms recommended by the Fund, with global credit rating agencies acknowledging progress amid improving macroeconomic indicators.

An IMF mission is currently in Islamabad for talks with the government under the Extended Fund Facility (EFF) of $7 billion agreed last September.

Prime Minister Shehbaz Sharif said during his visit to New York in September that the recent flood damages should be “factored in” as the IMF reviews Pakistan’s fiscal performance, arguing that the scale of the disaster underscores the need for flexibility in the assessment process.

The World Bank added in its report that Pakistan, which has historically maintained high tariffs with a complex structure, stands to benefit in terms of exports and growth from a newly approved five-year reform plan (2025–2030) to cut tariffs by half.


Pakistan’s army chief to get expanded powers under proposed reform

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Pakistan’s army chief to get expanded powers under proposed reform

  • Asim Munir, President Trump’s ‘favorite field marshal,’ to be head of all military forces, a new position
  • Constitutional cases to be taken away from Supreme Court, opposition raps changes as undemocratic

ISLAMABAD: Pakistan’s powerful army chief will be given an expanded role and the remit of the Supreme Court will be curbed under constitutional changes passed by the upper house of parliament this week, a move the opposition says will undermine democracy.

Pakistan, historically coup-prone, is seeing its longest period of elected government. But in recent years, after civilians have sought to assert more authority in governance, the military has taken tighter hold of the levers of power, while not staging an outright takeover.

The bill, passed on Monday by the Senate in about three hours, unusually fast for a constitutional change, after the opposition boycotted the debate, is now before the lower house before it can become law.

Army chief Asim Munir, described by US President Donald Trump as his “favorite Field Marshal,” would take overall command of the military — including air and naval forces — with the new position of Chief of Defense Forces under the proposed amendment. After completion of his term, he would retain his rank and have legal immunity for life.

While the military has long wielded extensive power, the reforms would give it greater constitutional backing that would not be easily reversed. Hitherto the army chief was the equal of the air force and navy chiefs, with a chairman of the joint chiefs sitting above him, a post that would be eliminated.

Constitutional cases would no longer be heard by the Supreme Court but by a new Federal Constitutional Court, with judges appointed by the government. In recent years, the Supreme Court has, at times, blocked government policies and ousted prime ministers.

Critics say handpicked judges would now hear the most politically sensitive cases impacting the government, with the Supreme Court dealing with civil and criminal matters.

Under the reforms, President Asif Zardari would also get immunity for life from prosecution.

“All these amendments are for governance, and the federal government’s coordination with the provinces, and to strengthen defense capability after winning a war,” Information Minister Attaullah Tarar said, referring to clashes with India in May.

The government said it was confident it had the numbers in parliament to approve the constitutional changes, which were unusually introduced to the Senate over the weekend. A two-thirds majority is required in the two houses that make up the parliament, the Senate and National Assembly.

The biggest opposition party, founded by jailed ex-prime minister Imran Khan, said it was not consulted. After a noisy protest, opposition parties walked out on Monday when the amendment was introduced to the Senate floor for debate.

Khan’s party PTI condemned the proposed changes.

“The amendment serves as a tool for the ruling coalition to bulldoze institutional checks and balances, silence the opposition, restrict fundamental rights, and concentrate power in its own hands,” PTI’s spokesman for international media, Zulfi Bukhari, told Reuters.

Munir was promoted from General to Field Marshal after the May conflict with India. Law Minister Azam Tarar said on Saturday the rank would be given constitutional protection “because he is the hero of the whole nation.”

The military did not immediately respond to a request for comment. Security officials said the changing nature of modern war, where land troops do not necessarily play the paramount role, requires unified command of all the armed forces.

The government says the court reforms are necessary because hearing constitutional cases takes up too much of the Supreme Court’s time, creating a case backlog.