- Pakistani banks see stronger growth opportunities ahead: Fitch.
- Global Rating Agency cites improving the overall business relationships.
- Says Pakistan’s recovery follows a severe crisis period.
Global Credit Rating Agency Fitch has predicted Pakistan’s real GDP growth of 3.5% by 2027, up from 2.5% by 2024, according to Fitch Ratings.
“Pakistan’s improved sovereign credit profile amplifies this view,” noted Fitch and referred to the upgrade of the country’s long-term issuer standard assessment (IDR) to ‘B-‘/stable from ‘CCC+’ in April 2025.
Recovery comes after a particularly turbulent period for Pakistan’s economy. The inflation, which peaked by 38% in May 2023, has since relieved 4.1% in July 2025, when Fitch expects it to an average of approx. 5% for the year.
Meanwhile, monetary policy has changed in response to facilitating inflation pressure. Since May 2024, Pakistan’s central bank has halved the policy rate to 11%, while external stability has improved through reduced currency volatility and surplus on current account.
Fitch expects this combination of lower interest rates and a more stable macroeconomic environment will increase the demand for private credit.
“We expect that the combination of lower interest rates and an improvement in the macroeconomic environment to stimulate private credit needs,” Fitch said, adding that this should support the “steawe loans and landfills and banks’ financial results.”
The Agency noted that Pakistan’s banks are set to take advantage of better opportunities to generate business volumes due to improving operating conditions in the midst of receding macroeconomic headwinds.
“Credit in the private sector that had fallen to a cyclic low of 9.7% of GDP in 2024 is expected to rebound, reducing banks’ dependence on the public sector lending. Continued economic and fiscal reforms could further support this shift,” the statement said.
However, Fitch also pointed to continuous risks and said that Pakistan’s improvement, albeit still weak, operating environment and its low sovereign credit rating remaining areas of concern.
The agency warned that banks’ inherent creditworthiness will remain “closely linked to the sovereign and pace of economic reform” due to their significant exposure to sovereign securities and statutory units.
Despite previous economic turbulence, Pakistani banks have shown resilience. The sector’s reduced loan conditions improved to 7.1% by March 2025, down from 7.6% at the end of 2023, in the midst of a strong loan growth of 26%, largely driven by inflation.
