Pakistan’s economic outlook showed mixed signals as the government shared new data on Friday. The current account deficit rose 256 percent, while inflation stayed between 5 and 6 percent due to food price pressure. Industrial activity improved with reforms, yet key fiscal indicators weakened and stayed below last year’s levels.
The report noted that tax revenue, non-tax revenue and fiscal surpluses declined as a share of GDP. The tax-to-GDP ratio fell to 2.96 percent, and non-tax revenue also dropped. Even so, officials said the economic outlook remained stable because exports grew steadily and remittances stayed strong, despite higher imports for production needs.
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Expenditures increased faster than revenues, adding pressure on fiscal management. However, the government highlighted positives like rising remittances, stronger LSM activity and growing IT exports. Public debt also fell by Rs1.371 trillion, marking the first quarterly decline in five years. This supported a more hopeful economic outlook for the coming months.
Agriculture showed mixed performance. Sugarcane, mung and chillies output increased, but cotton, rice and maize declined. Agricultural credit rose by 18.6 percent, and machinery imports also increased. LSM posted 4.1 percent growth across 15 sectors, led by textile, apparel, food, petroleum and automobiles. However, imports rose faster than exports, widening the trade deficit to $10.1 billion.
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Remittances grew 9.3 percent to $13 billion, with major inflows from Saudi Arabia and the UAE. But net FDI dropped 26 percent as investment slowed. Federal revenues rose slightly, while expenditures increased sharply. Still, the government expressed confidence that reforms, digitisation and stronger fiscal discipline would help improve the economic outlook going forward.