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ISLAMABAD: S&P Global Market Intelligence has unveiled its latest macroeconomic projections for Pakistan, painting an optimistic yet cautious picture of easing inflation, manageable current account deficits, and accelerating growth. Released this week, the forecasts largely mirror the State Bank of Pakistan’s (SBP) recent guidance, signaling broad consensus among analysts on the South Asian nation’s post-pandemic stabilization.
At the core of S&P’s outlook is a stable inflation trajectory. The firm predicts consumer price inflation at 5.1% for 2026, ticking up slightly to 5.6% in 2027. These point estimates fall comfortably within SBP’s target band of 5% to 7% over the next two years. “This alignment underscores a shared view of controlled inflationary pressures,” said an S&P economist in the report, attributing the stability to tighter monetary policy and subsiding global commodity shocks. SBP Governor Jameel Ahmad echoed this in recent remarks, emphasizing the central bank’s commitment to its 5%-7% corridor through vigilant rate management.
On the external front, S&P forecasts a current account deficit of 0.5% of GDP in 2026, widening modestly to 1.3% in 2027. This dovetails neatly with SBP’s projection for fiscal year 2026 (FY26), where the deficit is expected to hover between 0% and 1% of GDP. The SBP’s narrower FY26 focus leaves its stance on 2027 unclear, but S&P’s figures suggest remittances and export growth could keep imbalances in check despite rising import demands from industrial revival. Pakistan’s current account has swung from deficits to surpluses in recent quarters, bolstered by robust worker inflows from the Gulf and subdued oil prices.
Real GDP growth presents minor divergences but an upward trend. S&P eyes 3.5% expansion in FY26, just shy of SBP’s 3.75%-4.75% range, before strengthening to 4.4% in FY27 – a figure that slots inside SBP’s FY26 bounds. This projected pickup reflects anticipated investments in energy, agriculture, and IT sectors, alongside IMF-supported reforms under the Extended Fund Facility. SBP’s baseline remains anchored in agricultural recovery and CPEC Phase II infrastructure, though risks from geopolitical tensions and climate events loom large.
Overall, the projections reinforce a narrative of gradual economic improvement. Pakistan’s inflation has plummeted from double digits in 2023, growth has rebounded from 2022’s contraction, and foreign reserves have climbed above $10 billion. Yet analysts caution that political stability, fiscal discipline, and timely external financing will be pivotal.
S&P’s report highlights Pakistan’s resilience amid global headwinds, positioning it for emerging market outperformance if reforms stick. With SBP’s next policy review looming, these aligned forecasts could pave the way for steady rate cuts, boosting investor sentiment.
As Tuesday’s PKT session unfolded, the KSE-100 index edged higher, reflecting market approval of the sanguine data.
