IMF warns of economic slowdown
The government wants to accelerate economic growth to lower rising poverty and unemployment, but the IMF was of the view that Pakistan has not yet reached a stage where it can afford sustainably higher economic growth. PHOTO: Reuters
The International Monetary Fund (IMF) has warned that the ongoing Middle East conflict will significantly slow economic growth across the MENAP region in 2026, posing serious risks to countries like Pakistan.
The MENAP region, which stands for Middle East, North Africa, Afghanistan, and Pakistan, is a strategically important economic corridor connecting three continents.
The warning was issued by IMF Resident Representative in Pakistan Dr Mahir Binici, while addressing a special session at the Sustainable Development Policy Institute (SDPI), where he also presented the IMF's Regional Economic Outlook for April 2026.
Dr Binici said the war, which began on February 28, triggered a severe and multi-dimensional economic shock, disrupting energy markets, trade routes, and global financial conditions.
He noted that the fallout has adversely affected global supply chains, pushing up prices of food and fertilizers and slowing economic momentum across the region, with risks of further deterioration.
He emphasized that oil-importing countries such as Pakistan are particularly vulnerable, as the conflict is exacerbating pre-existing economic weaknesses.
However, he said Pakistan's performance under the IMF's Extended Fund Facility programme remains broadly "on track".
Highlighting policy priorities, Dr Binici stressed that maintaining economic stability requires prudent fiscal management, a data-driven and tight monetary policy, and continuity in structural reforms. He urged the government to avoid untargeted subsidies and instead adopt targeted and temporary measures to protect vulnerable segments of society while strengthening fiscal and external buffers.
He underscored the need to diversify trade routes, invest in critical infrastructure, enhance regional cooperation, and promote inclusive growth led by the private sector to build a more resilient economy.
Dr Binici added that sustaining reform momentum is essential for Pakistan to navigate rapidly evolving regional and global dynamics while maintaining macroeconomic stability.
Earlier, welcoming the IMF representative, SDPI Executive Director Dr Abid Qaiyum Suleri said the session aimed to assess the impact of changing regional and global conditions on Pakistan's economy.
He pointed out that the next tranche under the IMF programme is contingent upon approval by the Fund's Executive Board.
Dr Suleri also highlighted the importance of reforms in the energy sector, particularly negotiations related to capacity payments and stressed the need to increase the share of renewable energy.
"Pakistan must improve its preparedness to deal with external economic shocks through timely and targeted policy responses," he said.