Karachi:
State Bank of Pakistan (SBP) has trimmed its FY26 growth prospects warning that devastating floods will keep real GDP extension near the lower end of its previous 3.25% –4.25% prognosis area. However, analysts in the private sector paint an even gloomy image, with Topline Service Papers that revise their projection to only 2.75%-25%, down from 3.5%–4.0%, in the midst of widespread agricultural losses and mounting of macroeconomic pressure.
Topline Securities has cut Pakistan’s economic growth forecast for FY26, which warns that floods and heavy rain have disturbed agriculture and probably weigh on wider macroeconomic indicators. The revised Outlook comes days prior to the International Monetary Fund’s (IMF) second half -yearly review of the country’s extended fund facility (EFF) on September 25, 2025.
Topline projects that agricultural growth has been trimmed to 2.6%from 3.4%, with key crops expected to contract with 2.3%. “We now expect damage to 15% and 10% respectively on rice and cotton,” the report says.
A few days earlier ARIF HABIB LIMITED (AHL) also revised its projections on agricultural production due to flooding.
“We expect the GDP growth to be down from 3.46% to 3.17% after flooding,” said AHL’s Sana Tawfiq while talking to the Express Pakinomist.
Pakistan’s economy faces fresh headwinds as the initial estimates place the cost of the floods 2025 to RS409 billion ($ 1.4 billion) or 0.33% of GDP, according to AHL research. Agriculture carried brown with losses exceeding the RS302 billion (0.24% of GDP), which emphasized the sector’s vulnerability to Klimachok. Damage to transport and communication infrastructure is appreciated for RS97.6 billion, while loss of housing is at RS8.95 billion. Cattle loss was minimal of RS0.5 billion.
Director Research of Topline Service Papers, Shankar Talreja, noted that the deficit for current account (CAD) is expected at the higher end of 0-0.5% of GDP, as imports are expected to grow by 10% against 9% earlier, while exports can only increase 1% compared to the previous 4% projection. However, transfers have been revised up to 6% growth or $ 40.2 billion, “reflects historical increases during crises.”
Floods have triggered sharp food price increases, with wheat and flour up 38-40% and the most important vegetables that waves approx. 40% in recent weeks. Inflation for FY26 is now expected at 6.5%-7.5%against 6%-7%earlier. September Food inflation alone is projected to 8% -9% month to month.
Sheikh Muhammad Tehseen, a businessman, warned that the decline in agricultural production after the recent floods will have far -reaching consequences across the food value. He said that the disturbance will not only reduce the domestic availability of central ingredients, but also hit food exports, including packed and processed objects, thereby affecting Pakistan’s trade earnings.
Tehseen called on the government to formulate a comprehensive strategy to dampen the agricultural sector against these shocks. He recommended measures to increase crop production in unaffected areas to offset potential deficiencies. At the same time, he emphasized to support local industries by uncovering energy and supply rigs and lowering the policy rate. Such steps, he claimed, would improve industrial production, maintain exports and help narrow the threatening trade deficit.
President of Sindh Abadgar Board (SAB), Mahmood Nawaz Shah, attached some hope of cotton. When he emphasizes that cotton arrivals in Sindh have increased by approx. 40%, exceeded expectations, he said that Sindh now represents almost half of Pakistan’s cotton area with losses of approx. 10%. While Punjab may see setbacks in the coming weeks, Sindh’s crop remains resistant. Rice production is also expected to remain stable, with potential losses that do not cross 10%, raising the hope of a bumper harvest if last year’s challenges do not repeat. Looking forward to the Rabi season emphasized Shah Wheat’s significance and noticed that sufficient winter rain could ensure sufficient water supplies. Even a 5-10% wheat shortage, he added, could be balanced by gains in other feed crops.
Given these risks, Topline does not see additional monetary easing. “We expect the policy rate to the bottom of 11% instead of our previous 10% forecast,” it said.
The tax deficit for FY26 is up to 4.8% of GDP from 4.1%, as revenue is projected to RS13.6 trillion against the previous RS14.1 trillion. The primary balance is expected at 1.6% of GDP. The government has declared an agricultural emergency with possible exceptions of electricity for flood houses.
Despite pressure, Topline expects the IMF program to remain intact. “Any relaxation on revenue or balance targets cannot be excluded in view of precedent during previous floods,” it said.
Pakistan’s external financing requirements are $ 10.5-11.5 billion, with reserves projected over $ 17 billion by June 2026. Rupee is expected on RS292-297 per year. Dollar before this date.
Topline said reforms remain on track, including Pakistan International Airline’s privatization, circular debt resolution and investments in mining, offshore drilling and renewable energy sources. The Reko DIQ project is expected to achieve financial ending soon.
“Although the floods pose in the short term, Pakistan’s resilient foot and ongoing reforms will support recovery,” the report said.
