ISLAMABAD – Global trade tensions take hit at Pakistan’s growth as International Monetary Fund (IMF) revised outlook to 2.6pc amid US Tariffs.
In World Economic Outlook, US based lender responded to Trump led government’s decision to slap tariffs on imports from nearly all trading partners. Pakistan was notably impacted, with its exports to Washington now subject to 29% tariff. This has raised serious concerns among local economists about the country’s already fragile economic recovery.
Earlier this year, the lender slashes Pakistan’s growth projection from 3.2% to 3%, but the latest revisions bring it down further, reflecting both domestic and global headwinds. The Fund also predicts that inflation in Pakistan will rise to 5.1% this fiscal year and 7.7% in the next.
The tariff move could have a devastating impact on the country’s export sector, warning of job losses, reduced foreign exchange reserves, and broader economic instability.
Furthermore, IMF also revised down its global economic growth outlook, cutting 2025 forecast from 3.3% to 2.8%, with 2026 now expected to see a modest 3% expansion. Rising tariffs and persistent trade disputes have also led to an upward revision in global inflation projections—now expected to reach 4.3% in 2025 and 3.6% in 2026.
Regional Outlooks
- Eurozone growth is now expected to slow to 0.8% in 2025 and 1.2% in 2026.
- Germany may see zero growth next year, as fiscal reforms and slowing exports hit the economy.
- The UK’s growth forecast has been cut to 1.1% for 2025 due to trade concerns and reduced consumer spending.
- Japan faces a 0.6% growth projection, 0.5 percentage points lower than earlier estimates.
- China’s growth has also been downgraded to 4%, as export challenges persist despite increased fiscal support.
IMF warned that unless global leaders act swiftly to restore stability and clarity to the trade system, uncertainty will continue to drag down investment and productivity worldwide.
Pakistan eyes $1bn IMF tranche, Reko Diq Financing as Aurangzeb meets lenders
