The International Monetary Fund (IMF) released projections in December 2025 indicating that Pakistan’s economy has regained some short-term stability. Economic growth is forecasted to rise modestly from 2.6% in fiscal year 2025 to 3.2% in fiscal year 2026, a rate only slightly exceeding Pakistan’s high population growth estimated between 1.8% and 2.55%. Per capita income stood at $1,677, highlighting limited economic expansion. Inflation has dropped significantly from an average of 23.4% in FY-24 to about 4.5% in FY-25, though it is projected to increase to 6.3% in FY-26. Fiscal performance shows improvement with government revenues expected to rise and the budget deficit forecasted to narrow from 6.8% to 4% of GDP, allowing for a primary surplus around 2.5%. However, Pakistan’s total government debt remains heavy at approximately 72-73% of GDP, restraining fiscal flexibility. The report emphasizes that despite these gains, domestic interest costs are high due to debt, and foreign direct investment remains very low, projected at only 0.5-0.6% of GDP, underscoring weak investment conditions. Unemployment improvement is only slight, indicating limited job creation. The Pakistani rupee showed real effective appreciation of 15.4% in FY-25, suggesting enhanced currency stability after prior depreciation. Overall, the IMF concludes that while the immediate threat of economic free fall has lessened, Pakistan remains on a narrow stabilization path marked by weak growth, heavy debt, and constrained relief for households. Transferring this stabilization into sustained and inclusive growth is a continuing challenge.