Pakistan Economic Survey 2025-26 shows the country’s economy grew by 3.7% during the outgoing fiscal year, while remittances surged close to a record $41 billion, highlighting mixed but improving macroeconomic conditions ahead of the federal Budget 2026-27.
The Pakistan Economic Survey 2025-26, released by the government, presents a detailed snapshot of economic performance, showing moderate growth, easing inflation, and stronger external inflows. However, it also reflects gaps in key sectors like agriculture and exports that fell short of official targets.
The Finance Ministry reported that growth remained below the 4.2% target but improved compared to the previous year. Officials attributed the shortfall to global economic slowdown, regional tensions, and weather-related disruptions that affected crop output and supply chains.
Growth and Macroeconomic Stability
Pakistan’s economy showed signs of stabilization during FY2025-26, even as global uncertainties continued to pressure emerging markets. Inflation averaged around 6.7%, marking a significant decline compared to double-digit levels in recent years. This helped ease pressure on household budgets and supported consumer activity in urban centers.
Fiscal indicators also showed improvement. The government posted a primary surplus of 3.5% of GDP, the highest in over two decades. Analysts view this as a sign of tighter fiscal discipline under ongoing structural reforms and international financial monitoring.
Tax collection remained strong, with the Federal Board of Revenue collecting over Rs11 trillion during the year. Non-tax revenues also contributed significantly, supported by central bank profits and petroleum levies.
Foreign exchange reserves rose sharply by nearly 49%, reaching $17.2 billion. This improved import cover and strengthened confidence in Pakistan’s external position, particularly at a time when global commodity prices remained volatile.
Despite these gains, industrial and agricultural sectors struggled to meet targets. Agriculture grew by just 2.89%, well below expectations, with major crops underperforming due to climate stress and input costs. Cotton production, a key export-linked crop, also declined slightly.
Industrial growth stood at 3.51%, driven by partial recovery in textiles, cement, and automobile production. However, the sector remained below target levels, reflecting weak demand and high financing costs.
Remittances and External Sector Strength
One of the strongest highlights of the Pakistan Economic Survey 2025-26 was the record performance of overseas workers’ remittances. Inflows are expected to reach nearly $41 billion by the end of the fiscal year, making it one of the largest sources of foreign exchange for the country.
Officials credited improved banking channels and digital platforms, including initiatives like Roshan Digital Account, for encouraging formal remittance flows. In the first 11 months alone, Pakistan received around $38 billion, showing steady year-on-year growth.
Exports, however, remained under pressure. Merchandise exports declined compared to the previous year, while imports increased due to higher energy costs and demand for industrial inputs. This widened the trade gap and pushed the current account into a small deficit.
IT exports continued to offer a positive signal. The sector generated approximately $3.8 billion, reflecting a strong 21% annual increase. This growth highlights Pakistan’s expanding digital economy and its potential role in future export diversification.
Services remained the most stable sector, slightly exceeding growth expectations. Wholesale, retail, and financial services contributed to overall economic activity, helping offset weaknesses in agriculture and manufacturing.
Outlook Ahead of Budget 2026-27
The findings of the Pakistan Economic Survey 2025-26 set the stage for Budget 2026-27, which is expected to focus on fiscal consolidation, revenue expansion, and targeted social protection.
Policymakers are likely to maintain tight monetary and fiscal discipline under IMF-linked commitments, limiting space for aggressive spending. At the same time, the government is expected to prioritize widening the tax base and improving compliance.
Energy sector reforms and new levies are also under consideration, while social welfare programs may receive increased attention to cushion lower-income households from inflationary pressures.
Economists believe Pakistan’s near-term growth outlook will remain moderate, with external risks such as global energy prices and climate-related disruptions continuing to influence performance.
Despite challenges, the steady rise in remittances, improving reserves, and declining inflation suggest that macroeconomic stability is gradually returning. However, sustaining this momentum will depend on structural reforms and consistent policy execution.
