Pakistan’s economy is showing clear signs of recovery, according to the latest Monthly Economic Update and Outlook Report released by the Ministry of Finance. The report says that the first quarter of the fiscal year 2025–26 saw steady growth, supported by strong policy measures, fiscal discipline, and structural reforms. It highlights that economic activities remained positive, reflecting improved confidence among investors and institutions.
The ministry noted that the recent staff-level agreement with the International Monetary Fund (IMF) demonstrates Pakistan’s firm commitment to economic reforms. It said the agreement confirms that the government is maintaining sound economic fundamentals and responsible fiscal management. Officials added that this stability is helping to strengthen Pakistan’s financial credibility at home and abroad.
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The report also revealed a sharp decline in Pakistan’s default risk, signaling renewed investor trust. The country’s credit default swap (CDS) has dropped by 2,200 basis points in the past 15 months. This decline marks one of the biggest improvements in Pakistan’s international financial outlook in recent years. The ministry said the country’s debt management system remains strong and sustainable, which further boosts market confidence.
Despite recent flood-related pressures, inflation is expected to remain between 5% and 6%. The ministry said the government continues to maintain fiscal discipline while ensuring social protection for vulnerable groups. It added that ongoing reforms aim to keep inflation stable, protect low-income households, and promote inclusive economic growth.
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The report also highlighted positive recognition from international agencies. Fitch has awarded Pakistan an “Excellent” rating for meeting global standards on green, social, and sustainable bond financing. However, the ministry acknowledged that floods caused an estimated Rs430 billion in agricultural losses. It said recovery is underway, with higher agriculture loans, new machinery imports, and improved crop production pointing to a resilient rebound.