THE Asian Development Bank has upgraded its growth projection for Pakistan’s economy from 3pc to 3.5pc for the current fiscal year in a move that, in part, endorses the government’s claim of recovery. At the same time, it cautions against mistaking stability for resilience. Pakistan has indeed moved from crisis to stabilisation over the past couple of years under the IMF bailout programme. It has even begun to show stronger growth momentum, helped by economic reforms amid a challenging global environment as noted by an ADB official. The bank believes that recovery in manufacturing, easing inflation and improving investor confidence indicate that macroeconomic management is beginning to yield results and is reflected in the recent economic growth momentum.

That said, the lender has pointed out that the recovery remains externally driven and structurally weak on account of low industrial and agricultural productivity and stagnant exports. Hence, it is unsurprising that the ADB in its latest report has warned that despite stabilisation and recovery, Pakistan’s economic outlook faces significant downside risks from global economic uncertainty, particularly the current Middle East crisis, leading to elevated inflationary, fiscal and external account pressures. Like other multilaterals, the bank has rightly stressed the need for deep structural changes to build on the recent gains, without which the current growth cycle could become a prelude to yet another crisis, a concern underscored in its warning of significant downside risks from global uncertainty. Pakistan’s core vulnerability remains its external dependence: heavy reliance on imported energy, Gulf remittances, low industrial and farm productivity, and weak export performance that leave the economy exposed to geopolitical shocks. The recovery itself is unbalanced and is driven more by consumption and rising imports than export competitiveness. This raises the spectre of a widening current account deficit and renewed balance-of-payments stress. In effect, we are again growing the wrong way, with faster demand unsupported by productive capacity. Therefore, the growth rate does not matter as much as the credibility and continuity of reform does. The ADB report is a reminder that without progress in energy, taxation, SOEs and trade, the recent economic gains will be short-lived. In an unpredictable external environment, policy complacency could quickly unravel our hard-won stability.

Published in Dawn, April 13th, 2026