World Bank warns of rising inflation in Pakistan due to recent floods

 The World Bank, in its Pakistan Development Report 2025, has warned that inflation in Pakistan is expected to rise due to the recent floods.

According to the report, the floods caused severe damage to Pakistan’s economy. Inflation is projected at 7.2% for the current fiscal year and 6.8% for the next.

The report noted that tariff reforms alone are not enough to boost exports and urged the government to prioritize export growth in its development agenda.

The World Bank suggested that increasing remittances could help bridge the gap between exports and imports and called for full implementation of the National Tariff Policy announced in the federal budget.

The report stated that Pakistan’s economic output rose to 3% in 2025, up from 2.6% last year, and is expected to remain at 3% in 2026.

Growth was observed in the industrial and services sectors, while agriculture remained under pressure. Fiscal discipline helped keep inflation in check, and the economy is projected to grow by 3.4% in 2027.

The World Bank advised Pakistan to continue its reform agenda, expand the tax base, and proceed with public sector reforms and privatization.

The report also highlighted that around 1.6 million young people enter the job market every year. Inflation is forecast at 7.2%, and poverty at 21.5% for this fiscal year. It emphasized the need for stronger economic growth to reduce poverty and improve living standards.

Additionally, the World Bank stressed the importance of comprehensive reforms across sectors, increased revenue generation, greater investment, and a more business-friendly environment.