Pakistan’s economy is expected to grow by 2.7% in the fiscal year ending June 2025, slightly above the 2.5% growth recorded in the previous year, according to the annual Economic Survey released by the government on Monday. The survey was unveiled just a day ahead of the federal budget presentation, providing key insights into the country’s economic performance and outlook.
The government had initially set a more ambitious GDP growth target of 3.6% for the current fiscal year but revised it downward to 2.7% in May. The International Monetary Fund (IMF) projects Pakistan’s GDP will grow by 2.6% in FY2025 and anticipates a stronger 3.6% growth in FY2026.
Despite the revised outlook, Prime Minister Shehbaz Sharif’s administration is targeting 4.2% GDP growth for the next fiscal year. Planning Minister Ahsan Iqbal cited the need to balance investment-driven growth with fiscal discipline, including maintaining a primary surplus and addressing rising defence expenditures, especially amid ongoing tensions with neighboring India.
To support economic expansion, the State Bank of Pakistan slashed its policy rate significantly—cutting it by more than 1,000 basis points during the fiscal year. The latest reduction in May brought the key interest rate down to 11%, marking a resumption of the easing cycle that had paused briefly in March after peaking at 22%.
The economic survey highlighted a notable improvement in Pakistan’s external balance. The country posted a current account surplus of $1.9 billion between July and April of the ongoing fiscal year, compared to a $200 million deficit during the same period last year.
In his foreword to the survey, Finance Minister Muhammad Aurangzeb said the economy had gained international recognition for achieving macroeconomic stability. “Pakistan is consistently advancing on an upward trajectory, built upon investment-friendly reforms, enhanced domestic savings, and increased foreign direct investment,” he noted, projecting medium-term GDP growth at 5.7%.
Still, challenges remain. The government’s total revenue for the first nine months of the fiscal year stood at 13.37 trillion rupees. Efforts to boost revenue and reduce the fiscal deficit—recorded at 2.6% of GDP during this period—remain central to the conditions of Pakistan’s $7 billion IMF bailout program.
The federal budget for the 2025-26 fiscal year will be presented on Tuesday, setting the course for the country’s economic policy in a delicate but gradually stabilising environment.
