Fitch Says Pakistan’s GDP to Grow 3.5% by 2027

Global credit rating agency Fitch Ratings has projected Pakistan’s real GDP growth to reach 3.5 percent by 2027, rising from 2.5 percent in 2024, supported by economic reforms, easing inflation, and an improved sovereign credit profile.

The agency linked its optimistic forecast to Pakistan’s upgraded Long-Term Issuer Default Rating (IDR), which was raised to ‘B-’/Stable from ‘CCC+’ in April 2025. Fitch said the rating upgrade reflected a stronger fiscal position, reforms, and signs of a sustained recovery.

Pakistan’s economy has rebounded after a period of instability marked by record inflation, which peaked at 38 percent in May 2023. Inflation has since declined sharply, standing at 4.1 percent in July 2025, with Fitch expecting it to average around 5 percent this year.

With inflation under control, the State Bank of Pakistan has shifted monetary policy by cutting the policy rate in half to 11 percent since May 2024. The external sector has also stabilized through reduced exchange rate volatility and current account surpluses.

According to Fitch, these conditions are expected to fuel private credit demand, leading to stronger loan and deposit growth and better financial performance for banks. “Private sector credit, which dropped to a cyclical low of 9.7 percent of GDP in 2024, is expected to rebound, reducing banks’ reliance on public-sector lending,” the agency noted.

Pakistan’s banking sector has shown resilience despite past economic turbulence. The impaired loan ratio improved to 7.1 percent by March 2025 from 7.6 percent in 2023, supported by strong loan growth of 26 percent, largely driven by inflation.

However, Fitch cautioned that risks remain, citing the still fragile operating environment and Pakistan’s low sovereign rating. The agency stressed that banks’ creditworthiness remains closely tied to the sovereign and the pace of structural reforms due to their significant exposure to government securities and state-owned entities.