Pakistan’s economic outlook continues to show resilience, supported by sustained industrial expansion, improving fiscal management, and stable macroeconomic indicators, according to the latest Monthly Economic Update & Outlook report from the Government of Pakistan’s Finance Division.
Agriculture has experienced notable growth in the first five months of FY2026, with farm credit disbursements rising 18.6% to Rs1.10 trillion from Rs925.7 billion in the same period last year. Mechanization also increased, as imports of agricultural machinery and implements climbed 27.3% to $58 million. Fertilizer consumption, however, showed mixed trends: urea offtake grew 15.6% year-on-year to 1.17 million tonnes, while DAP usage fell 16.1% to 464,000 tonnes, highlighting uneven input utilization.
Industrial activity maintained momentum, with Large-Scale Manufacturing (LSM) expanding 5.02% during July–October FY2026. Growth was recorded across 16 manufacturing sectors, including textiles, food, automobiles, electrical equipment, petroleum products, and tobacco. In October 2025, LSM growth accelerated to 8.3% year-on-year, led by a surge in automobile production, which saw car manufacturing increase 65.1%, and truck and bus output nearly double. The cement industry also posted gains, with total dispatches rising 11.5% to 21.4 million tonnes, driven by higher domestic demand.
Inflation moderated slightly in November 2025, with the headline Consumer Price Index easing to 6.1% year-on-year. Month-on-month inflation slowed to 0.4%, indicating reduced price pressures. Key contributors included education, health, transport, and non-perishable food items, while prices of perishable food items declined. Short-term price stability was further reflected in a 0.09% drop in the Sensitive Price Indicator in the week ending 24 December.
Fiscal discipline strengthened, resulting in a consolidated fiscal surplus of 1% of GDP during July–October FY2026, compared to 0.4% last year. FBR collections rose 10.2% to Rs4.73 trillion, driven by growth across all major tax categories.
External sector trends were mixed but manageable. Imports increased 11.1% to $25.6 billion, reflecting higher economic activity, while goods exports saw a slight decline. Textile exports, including knitwear and garments, recorded gains, and services exports surged, with IT exports rising 18.5% to $1.8 billion. Remittance inflows grew 9.3% to $16.1 billion, mainly from Saudi Arabia and the UAE. Foreign direct investment totaled $927.4 million during July–November FY2026, concentrated in power and financial services sectors, while portfolio flows remained negative. Pakistan’s foreign exchange reserves stood at $21 billion, including $15.9 billion held by the State Bank.
In response to easing inflation expectations, the Monetary Policy Committee reduced the policy rate by 50 basis points to 10.5% in December. The Pakistan Stock Exchange responded positively, with the KSE-100 Index gaining over 5,000 points in November, reflecting renewed investor confidence.
Social indicators also improved, with 349,850 overseas employment registrations recorded during July–November FY2026, and BISP social protection spending rising 26.8% to Rs143.5 billion.
Overall, the improving performance of key economic sectors, stable inflation, disciplined fiscal management, and rising industrial output signal gradual strengthening of Pakistan’s economic conditions. Analysts highlight that maintaining reform momentum and policy consistency will be crucial for sustaining growth in the coming months.
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