Here’s a breakdown of the survey presented ahead of federal budget FY26, starting July, will be released on Tuesday
Finance Minister Muhammad Aurangzeb shows a copy of the economic survey of fiscal year 2024-2025 during a news conference in Islamabad, Pakistan June 9, 2025.— Reuters
The Economic Survey 2024-25, a key pre-budget document, comes at a time when Pakistan’s economy is stabilising but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund (IMF) programme.
Pakistan's federal budget for the next fiscal year, starting July, will be released on Tuesday.
Advertisement
Here’s a breakdown of the survey, as analysed by brokerage firm Arif Habib Limited:
Pakistan’s economy grew by 2.68% in FY25, showing signs of stabilisation. GDP at current prices rose by 9.1% to Rs114,692 billion, while per capita income increased by 9.7% to $1,824.
Inflation eased sharply, with headline CPI at 0.3% in April 2025 versus 17.3% last year. Average inflation during Jul–Apr FY25 stood at 4.7%, down from 26.0% in the same period last year.
The investment-to-GDP ratio improved to 13.8%, and the saving-to-GDP ratio increased to 14.1%.
Agriculture posted modest growth of 0.56% in FY25, led by a 4.72% rise in livestock. However, major crops declined by 13.49% due to lower cultivation and weather challenges.
Industry expanded by 4.77%, supported by small-scale manufacturing and slaughtering. Large-scale manufacturing contracted by 1.5% amid high costs and supply constraints.
Services grew by 2.91% and retained the largest share of the GDP at 58.4%, supported by steady growth in retail, transport, and government services.
Pakistan recorded a fiscal surplus of Rs1,896 billion (1.7% of GDP) in 1QFY25, the first in 24 years. The FY25 fiscal deficit narrowed to 2.6% of GDP, while the primary surplus reached 3.0%.
The policy rate was reduced to 11% in May 2025 from a peak of 22%, reflecting falling inflation and lower energy and food prices.
Broad Money (M2) grew by 4.5% (PKR 1,604bn) during Jul–Mar FY25, down from 7.2% growth the previous year.
Private sector borrowing surged to Rs767.6 billion during Jul–Mar FY25, nearly triple last year’s level. Consumer financing also recovered strongly with a net increase of Rs71.4 billion.
The KSE-100 index gained 50.2%, closing at 117,807 points in March 2025, boosted by stable macroeconomics, corporate earnings, and IMF programme progress.
The current account posted a surplus of $1.9 billion during Jul–Apr FY25, reversing last year’s $1.3 billion deficit. Foreign exchange reserves rose to $16.64 billion in May 2025.
Remittances hit a historic monthly high of $4.1 billion in March 2025 and grew 31% YoY to $31.2 billion during July–April FY25.
Public debt stood at Rs76,007 billion at end-March 2025, with domestic debt at Rs51,518 billion and external debt at R24,489 billion ($87 billion).
The government reduced short-term debt by retiring Rs2.4 trillion in Treasury Bills and introduced new instruments like a 2-year zero-coupon Pakistan Investment Bond and a 1-month Treasury Bill.
Strategic liability management operations included repurchasing about Rs1 trillion in government securities through buybacks and exchanges.
Pakistan issued its first Green Sukuk worth Rs30 billion, signalling progress toward green finance and sustainable investment.
The government secured $1.4 billion under the IMF RSF to boost climate resilience, institutionalising a climate budget within its governance framework.
Outlook
Real GDP growth is projected to grow at potential in FY26, with medium-term growth expected at 5.7%, supported by macroeconomic stability, pro-growth reforms, and URAAN Pakistan’s transformation strategy.
Inflation is expected to remain anchored at 5–7% in the medium term, supported by global disinflation, easing energy prices, and improved domestic food production.
The current account deficit is projected at a sustainable 0.8% of GDP over the medium term, aided by moderating energy imports, IT export growth, and skilled labour remittances from the Gulf states.
Government focus on export diversification, regional trade linkages, and value chain integration is key to mitigating external shocks.
Fiscal consolidation is underway through tax base broadening, energy sector reforms, and privatisation, strengthening long-term fiscal health.
Ongoing IMF EFF & RSF support is enhancing investor confidence, facilitating public and private investment flows.
Improving credit conditions and lower inflation support a cautiously optimistic outlook for large-scale manufacturing recovery, contingent on continued macro stability and structural reforms.
Slowing global trade, rising risk premiums, and tighter immigration in host countries may impact exports, remittances, and investment sentiment.
Potential return migration and global job market tightening necessitate stronger domestic labour absorption strategies.