Fitch Ratings forecasts Pakistan GDP at 3.5% by 2027

Pakistan’s banking sector is entering a more promising phase as economic conditions improve and financial reforms take root, according to a new assessment by Fitch Ratings.

The international ratings agency noted that better operating conditions, easing inflation, and a stronger sovereign credit profile are opening the door for banks to expand business volumes and lending activity.

In April 2025, Fitch upgraded Pakistan’s Long-Term Issuer Default Rating (IDR) to ‘B-’ with a Stable outlook, up from ‘CCC+’, reflecting gradual but consistent progress in fiscal management, structural reforms, and overall economic recovery.

After several turbulent years marked by high inflation and financial instability, Pakistan’s economy is beginning to stabilise.

Fitch expects GDP growth to rise from 2.5% in 2024 to 3.5% by 2027. Inflation, which had once peaked at 38% in May 2023, dropped sharply to 4.1% in July 2025, and is expected to average around 5% for the year.

The State Bank of Pakistan’s policy rate—once among the highest in the region—has been cut by half since May 2024, now standing at 11%.

The, combined with reduced currency volatility and current account surpluses, has created a more stable environment for businesses and investors alike.