Pakistan: Economy

Domestic

The International Monetary Fund's updated global economic outlook, projecting 3.3% growth for 2026, framed domestic economic discussions. The forecast was lifted on expectations that an AI boom would offset trade tensions, though the IMF warned of risks to workers and the need for government support. Domestically, Pakistan's leadership is counting on an IMF support package to strengthen the economy, with a senior official suggesting such loans may not be needed long-term if plans for the JF-17 fighter jet program succeed. On a provincial level, a political dispute emerged in Karachi over infrastructure, with the Sindh chief minister approving over 21 billion rupees for city upgrades, including road improvements. The city's governor also criticized the Khyber Pakhtunkhwa chief minister for financial losses caused by road blockades during a visit, while new heavy traffic fines triggered public outcry.

International

IMF economic forecasts presented a mixed global picture, with growth outlooks raised for South Korea, Egypt, and Poland but trimmed for Italy, while Australia was singled out for its persistent inflation problem. Concurrently, the IMF expressed concerns about US dollar stability, warning that escalating US-Europe trade tensions or political uncertainty could trigger a global loss of confidence. In Asia, the IMF upgraded growth forecasts for China and Indonesia, and a team was scheduled to assess cyclone damage in Sri Lanka as part of talks on restarting a support program. The IMF chief traveled to Kyiv to finalize terms for a new $8.1 billion loan program for Ukraine, crucial for its wartime economy. For India, the IMF increased its growth forecast following strong performance. In trade, India's selective tariffs were noted as creating an opportunity for Pakistani carpets to enter the Indian market, while Pakistan's carpet industry also gained from European buyers shifting orders away from India due to new US tariffs. However, Pakistan faces export challenges from separate US tariffs on Iranian goods.