Pakistan’s economy has once again demonstrated its resilience, regaining growth momentum on the back of rising remittance inflows and robust large scale manufacturing — most notably in the automobiles, textiles, and petroleum sectors. However, experts caution that geopolitical tensions and a deepening energy crisis could jeopardize these gains, potentially placing significant obstacles in the country’s path.
Leading economists, officials, and analysts said Pakistan’s economic outlook for 2026 remains moderately positive, with gross domestic product (GDP) growth projected around 3.6 per cent by the IMF and 3.1 per cent by the World Bank. Agriculture is improving with better input availability and rising crop output, while remittance inflows continue to strengthen the external sector and foreign exchange reserves. Stable inflation, fiscal discipline, and expanding IT and services exports support the country’s gradual economic recovery and medium-term growth prospects.
Experts warn that fiscal vulnerabilities, global uncertainty, and ongoing trade fragmentation could reduce demand and affect export performance. “Pakistan’s fiscal vulnerabilities remain significant. High financing needs and reliance on reforms to maintain consolidation mean any policy slippage or external shock could destabilise progress,” they said.
Dr Ashfaq Hasan Khan, Director-General of the National University of Sciences and Technology (NUST), highlighted the impact of the ongoing Middle East conflict on Pakistan’s energy supplies. He noted that a potential closure of the Strait of Hormuz could disrupt oil and gas flows, leading to higher inflation, rising interest rates, slower growth, and increased poverty. Dr Khan suggested fuel rationing and limiting government travel to conserve energy, while cautioning against closing universities due to the limitations of online education.
Dr Qais Aslam, Professor of Economics and former chairman at GC University, Lahore, said Pakistan’s GDP could reach 4.1 per cent next year, driven by consumption, public sector spending, and growth in IT and services. Remittances of over $30 billion annually remain a crucial support for domestic demand and external stability. He added that the services sector contributes 54 per cent to GDP, with finance, healthcare, education, and technology driving employment and growth, while large-scale industry and agriculture provide additional support.
Despite these gains, inflation and energy costs remain key challenges. Inflation rose from 5.6 per cent in January 2026 to seven per cent this month, while the war in Iran threatens to disrupt oil and gas imports. Trade with India is effectively halted, Afghanistan remains unstable, and the trade deficit with China exceeds $15 billion, leaving Pakistan reliant on Karachi and the volatile Indian Ocean for external trade.
Experts stress the need for structural reforms to sustain growth, including efficient governance, education system improvements, land and water policy reforms, and industrial diversification through international partnerships. Dr Qais said these long-term measures are essential to ensure employment, economic stability, and social progress, especially amid external shocks and energy shortages.
