Pakistan’s economy continued on a stable path in Financial Year 2025 (FY25), with real GDP growth reaching 2.68% and inflation expected to settle between 3% to 4% by June, according to the Ministry of Finance’s latest Monthly Economic Outlook.
The report highlighted key improvements in both fiscal and external indicators. A major milestone was the current account surplus of $1.81 billion, while the fiscal deficit narrowed significantly. Impressively, the primary balance posted a surplus of 3.2% of GDP during the July–April period, reflecting sound financial management and policy reforms.
These gains were backed by support from the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), which helped restore investor confidence and enhanced the credibility of Pakistan’s economic policies. The country’s current account surplus also benefited from a remarkable 28.8% jump in remittances, reaching nearly $35 billion.
Export activity remained positive year-on-year, though May 2025 saw a monthly dip to $2.4 billion. Imports rose by 11.5%, driven by recovering industrial demand and increased procurement of capital goods. Despite these positive signs, foreign direct investment (FDI) fell by 14.4% — a reflection of lingering global uncertainties and domestic structural challenges.
On the fiscal front, Federal Board of Revenue (FBR) collections surged by 25.9%, and non-tax revenues soared by 68.1%. These results, largely shaped by IMF-backed reforms, helped reduce the fiscal deficit and maintain a healthy primary surplus.
Meanwhile, inflation averaged 4.6% during the July–May period, largely due to declining food and energy prices. Improved inflation expectations led the State Bank of Pakistan to slash the policy rate from 20.5% to 11%, encouraging greater credit expansion and economic activity.
Although large-scale manufacturing remained under pressure, with a 1.52% drop in output, several industrial sectors showed resilience. Challenges like high input costs and energy shortages still hinder full recovery, but policymakers remain optimistic.
