Pakistan’s economy is moving steadily toward a more stable growth trajectory, supported by a marked decline in inflation, rising foreign exchange reserves, and a revival of economic momentum. This positive shift follows a period of prolonged volatility, signaling renewed confidence in the country’s economic outlook and policy direction.
The recent developments were highlighted by Governor of the central bank, Jameel Ahmad, during high-level meetings with senior executives from major global financial and investment institutions, including J.P. Morgan, Standard Chartered, Jefferies, Barclays, Citibank, and Bank of America Securities. Representatives from leading credit rating agencies were also present. The engagements took place on the sidelines of the IMF–World Bank Annual Meetings in Washington, D.C., from October 13 to 18, 2025.
Governor Ahmad outlined that headline inflation in Pakistan has dropped to 5.6 percent in September 2025, down significantly from double-digit levels just two years earlier. Core inflation has also fallen sharply, from above 22 percent to below 8 percent, reflecting the success of disciplined monetary and fiscal policies. He reaffirmed that inflation is expected to remain within the central bank’s target range of 5 to 7 percent over the medium term, even as the country continues to recover from the economic effects of recent floods.
On the external front, Pakistan’s foreign exchange reserves have recorded a substantial improvement. The central bank has purchased $20 billion from the interbank market over the past three years, boosting reserves to a level five times higher than their February 2023 low. Forward liabilities have been reduced significantly, and public sector external debt has increased only marginally since June 2022. The central bank aims to raise foreign exchange reserves further to $17.5 billion by June 2026, reinforcing economic resilience against global shocks.
Economic growth has also started to rebound, with GDP expanding by 3 percent in FY25. Projections for FY26 suggest further acceleration to between 3.25 and 4.25 percent, despite the challenges posed by environmental disruptions and global uncertainty. The improved macroeconomic landscape is being supported by stable fiscal management and structural economic reforms.
Governor Ahmad also shared key updates from the central bank’s Vision 2028 Strategic Plan, which focuses on strengthening financial stability, enhancing financial inclusion, and expanding access to finance for small businesses and women. These initiatives are designed to foster a more inclusive and technology-driven financial ecosystem, supporting long-term sustainable growth.
He stressed that the impact of sustained policy discipline and structural reforms is becoming visible across several economic indicators. Lower inflation, a healthier current account position, and improving growth momentum indicate a stronger foundation for the economy. Continued engagement with global partners, including the International Monetary Fund and the World Bank, is expected to further support Pakistan’s efforts to achieve durable and inclusive growth.
With inflation contained, reserves strengthening, and confidence improving among international investors, Pakistan is positioning itself for a more stable economic future. The positive momentum could translate into stronger investment flows, job creation, and broader financial inclusion in the coming years.
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