The State Bank of Pakistan (SBP) expects the country’s economic recovery to gain further traction, projecting GDP growth of around 3% and foreign exchange reserves reaching $14 billion by the end of June 2025. This forward-looking statement was made by SBP Governor Jameel Ahmad during a series of high-level meetings with leading global financial institutions and rating agencies on the sidelines of the IMF–World Bank Spring Meetings in Washington, D.C.
Governor Ahmad underscored Pakistan’s improving macroeconomic fundamentals and enhanced external sector stability in discussions with senior executives from JP Morgan, Standard Chartered, Deutsche Bank, Jefferies, and key international credit rating agencies. He pointed to prudent monetary policy, ongoing fiscal consolidation, and targeted economic reforms as the driving forces behind the recent economic stabilization.
In a press statement issued by the central bank, the Governor highlighted that Pakistan has made substantial progress in rebuilding investor confidence and economic resilience. He emphasized that headline inflation has declined sharply in recent months, dropping to a multi-decade low of 0.7% in March 2025. This is a dramatic turnaround from inflationary peaks seen in the last two years. Core inflation, which previously exceeded 22%, has also fallen into the single-digit range and is expected to further ease in the months ahead.
Looking ahead, the SBP forecasts that inflation will remain within its target range of 5 to 7%, providing much-needed price stability for businesses and consumers alike. This downward trend in inflation is expected to support economic activity while maintaining financial discipline.
A major highlight of the Governor’s briefing was the improvement in Pakistan’s external financial position. SBP’s foreign exchange reserves have more than tripled since their low point in February 2023, reflecting both qualitative and quantitative strengthening of the country’s FX buffer. The Governor noted that this increase is not the result of additional external borrowing, which has been a major concern in previous years, but rather the result of policy-driven accumulation of reserves through FX purchases and a surplus in the current account.
Pakistan’s public sector external debt has also shown positive movement, declining both in absolute terms and as a percentage of GDP since June 2022. This marks a significant shift in the country’s debt profile and points to improved fiscal discipline and a reduced reliance on external financing.
Governor Ahmad explained that the SBP’s strategy is centered on building long-term resilience against external shocks, including ongoing volatility in global trade. He reaffirmed the central bank’s target to grow FX reserves to $14 billion by the close of FY25, providing a stronger financial cushion for the country.
On the growth front, the SBP is optimistic. As macroeconomic conditions stabilize, GDP growth is forecasted to recover to approximately 3% in the current fiscal year. International credit rating agencies have acknowledged these positive developments, suggesting a more favorable outlook for Pakistan’s economic trajectory.
Governor Ahmad concluded by reiterating the government’s commitment to maintaining macroeconomic stability and pushing forward with structural reforms. With continued progress, he expressed confidence that Pakistan will be on track to achieve sustainable growth and improved living standards for its population.