ISLAMABAD: The national economy has demonstrated remarkable resilience in the face of challenges over the past 12 months, with the PML-N-led coalition government’s economic reforms and fiscal strategies playing a pivotal role in steering the country toward growth.
Despite inheriting severe challenges due to global and domestic shocks, worsened by geopolitical instability, Pakistan achieved a 2.5 percent growth in Gross Domestic Product (GDP) last year, signalling a much-needed rebound after a period of economic instability.
Upon review, the government had inherited a struggling economy, with a -0.2% GDP growth, a 10.3% drop in industrial activity, 29.2% inflation, a 28.7% depreciation of the rupee, foreign reserves falling to $4.7 billion, a fiscal deficit rising to 7.8% of GDP, public debt reaching 75%, and external financing needs surging, with $25 billion in debt repayments due in FY 2024.
In the first year of the incumbents, the nation also saw inflation reducing, foreign reserves rising, and exchange rate stabilizing, setting the stage for continued progress.
The momentum carried into FY2025. Despite a slight deceleration in economic activity, the country recorded a modest 0.92 percent GDP growth in the first quarter of the fiscal year.
However, key sectors such as automobiles, textiles, and tobacco performed well, showing promise for the months ahead.
During the period under review, car production surged by an impressive 55.9 percent, while agricultural credit disbursements grew by 8.5 percent, underscoring the government’s ongoing support for crucial industries.
Inflation, a persistent concern for many years, saw a notable decline, dropping to 6.5 percent — the lowest rate in nine years. This decrease reflected the successful implementation of fiscal discipline and policies aimed at curbing price pressures.
The country’s current account posted a $1.2 billion surplus, driven by strong performances in exports, remittances, and foreign direct investment. These positive developments highlighted Pakistan’s growing appeal as an investment destination.
In a further sign of economic recovery, the fiscal deficit was reduced to 1.2 percent, reflecting tighter financial management and a commitment to fiscal stability. The stock market mirrored these gains, with strong performance boosting investor confidence, while credit rating agencies acknowledged the positive trend with upgrades.
From July to November FY25, the sectors that showed positive growth and industrial recovery included fertilizer production by 1.9%, exports by 10%, and worker remittances, which increased by 31.7%.
Foreign Direct Investment (FDI) grew by 20%, and Roshan Digital Account inflows increased by 30.8%, with foreign exchange standing at $15.9 billion. The KSE-100 index reached 111,377 points. Pakistan’s credit ratings were upgraded by Moody’s from Caa3 to Caa2 and by Fitch from CCC- to CCC+, with both agencies forecasting improvements in the external and fiscal outlook.
In September 2024, the government secured approval from the IMF for a 37-month, $7 billion Extended Fund Facility for Pakistan, projecting a 4.5% real GDP growth and a primary surplus of 2% by the end of the program.
To enhance public awareness and transparency, the Finance Division remained actively engaged in disseminating key achievements through visual documentation and digital platforms, including the upgraded Pakistan Economic Dashboard to provide real-time access to economic data and inform stakeholders including the public, policymakers, and investors about Pakistan’s financial progress.
Pakistan’s economic outlook, despite challenges, is steadily improving, thanks to prudent fiscal management, sectoral growth, and international confidence. The country’s continued resilience offers a hopeful prospect for the future.
