Pakistan could be heading toward a prolonged period of economic stagnation, cautioned economist Asad Ali Shah, following the World Bank’s latest projection of just 2.6% growth for FY25-26. This comes after a troubling four-year span of sluggish economic performance.

Shah, former president of the Institute of Chartered Accountants Pakistan (ICAP), shared his concerns on social media platform X, noting that the World Bank’s revised forecast falls significantly below the government’s more hopeful estimate of around 4%. He highlighted that the past four years—marked by growth rates of -0.2% in FY23, 2.5% in FY24, and 2.7% in FY25—represent what may be the worst economic period in Pakistan’s history, characterized by low growth, soaring inflation and interest rates, and a sharp decline in investor confidence.

According to the World Bank’s Pakistan Development Update, modest growth of 2.6% is expected in FY2025-26, hampered by devastating floods that have hurt agricultural production and renewed inflationary pressures. While inflation eased to single digits in FY2024/25 due to lower food and energy prices, ongoing flood-related disruptions to food supply chains are projected to drive inflation upward through 2027.

Former Federal Finance Minister Miftah Ismail echoed these concerns, labeling the FY22-23 to FY25-26 period as the worst four-year stretch for growth in Pakistan’s history. He criticized the government for sidestepping essential reforms—such as privatization, reducing ministry sizes, and improving local governance—and accused authorities of prioritizing stability over growth by maintaining high interest rates, taxes, and utility costs. Ismail warned that this approach is fueling unemployment, poverty, and political disengagement.

Asad Ali Shah further emphasized that while Pakistan’s economy may have stabilized, it has not truly recovered. He pointed to weak industrial performance, a severe agricultural crisis worsened by climate shocks and policy issues, and a halt in job creation. Shah stressed that stability should not be mistaken for success and urged credible reforms to rebuild investor trust, enhance governance, and reallocate resources toward productivity and exports to prevent stagnation from becoming the new norm.