ISLAMABAD: Pakistan’s economy has continued its positive trajectory in the first half of fiscal year 2024-25, building on the stabilization achieved in FY2024, with GDP expanded by 2.5 percent after the previous year’s contraction.
The positive momentum was fueled by sound macroeconomic management, effective inflation control measures, and enhanced fiscal and external accounts stability. Inflation substantially declined to 7.2 percent in H1-FY2025 from 28.8 percent a year earlier, supported by easing global prices, a stable exchange rate, and targeted government policies, finance ministry said in a report released here.
Policy reforms, monetary easing, and fiscal consolidation further strengthened the foundation for sustainable economic momentum, says State of Pakistan’s Economy Half Yearly Report July-December 2025.
According to the report, the agricultural sector grew by 6.2 percent in FY2024, buoyed by increased investment, expanded agricultural credit, and favourable weather conditions.
High-frequency indicators, including machinery, investment and water availability, suggest a positive outlook for future growth in the sector. The industrial sector exhibited mixed results; like textile sector is improving gradually.
The services sector is projected to continue its positive trajectory, driven by the recovery of domestic activity and growth in trade.
The current account balance posted a surplus of $1.21 billion in Jul-Dec FY2025. Record-high remittance inflows and strong export performance offset the increasing import bill.
Foreign Direct Investment (FDI) surged by 20 percent, driven by investments in the power and oil sectors. Foreign exchange reserves are enough to cover over two months of imports, supported by IMF disbursements and international financial assistance.
The Pakistani rupee appreciated by 1.2 percent, indicative of favorable external developments. The government has been able to reduce the fiscal deficit to 0.04 percent of GDP in Jul-Nov FY2025, a marked improvement from the previous year’s deficit.
The improvement was bolstered by robust growth in tax and non-tax revenue, reflecting improved fiscal discipline, reduced interest rates, and a stable exchange rate.
With strengthened economic fundamentals, declining inflation, and growing investors’ confidence, Pakistan is well-positioned for continued growth momentum throughout FY2025.
Key policy measures, including monetary easing and export facilitation, are creating an environment conducive to private sector-driven growth.
Continued fiscal discipline and improved external account, alongside favorable global trends, are expected to sustain this positive momentum.
Committed to sustainable growth, the government is focused on overcoming structural challenges and promoting inclusive development.
In this regard, recently, the government has unveiled its homegrown 5-Year Economic Transformation Plan, URAAN Pakistan. The plan underscores inclusivity through a pragmatic, inclusive, and self-reliant approach to address Pakistan’s economic challenges, it added.
