Defying global uncertainty, devastating floods and regional tensions, Pakistan’s economy rebounded with a robust 3.7 per cent GDP growth in fiscal year 2025-26, showcasing resilience and disciplined economic management, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said on Thursday.
Unveiling the Economic Survey of Pakistan 2025-26, he said the country stayed firmly on its path from stabilization to growth despite multiple external shocks, reflecting renewed confidence in the economy.
“The survey is not just an economic document but a story of resilience shown over the past year,” Aurangzeb said, adding that Pakistan remained steadfast on its journey from stabilization to growth.
He said that the fiscal year began with global trade uncertainty due to tariff-related issues, followed by devastating floods in August and September and later a regional conflict. “These exogenous factors tested Pakistan’s resilience, and we responded effectively while maintaining our growth trajectory,” he remarked.
Despite these challenges, the country recorded its highest GDP growth in four years. He recalled that the economy had contracted by 0.2 per cent in 2023, followed by growth of 2.6 per cent in 2024 and 3.2 per cent in 2025.
Aurangzeb said Pakistan’s economic size reached a historic level of Rs126.9 trillion, equivalent to $452.1 billion, while per capita income increased to $1,901 from $1,751 last year.
He said the growth was broad-based, with agriculture expanding by 2.89 per cent despite flood-related losses. The crop sector returned to positive growth while livestock, contributing around 60 per cent to agricultural GDP, continued to perform strongly, he added.
The industrial sector, he said, also showed significant improvement, with large-scale manufacturing growing by 6.1 per cent, the highest in four years. Out of 22 manufacturing sectors, 16 recorded positive growth, including food, textiles, automobiles, petroleum products and electrical equipment.
On the demand side, he pointed to strong consumption trends, including a 10 per cent increase in cement demand, 17 per cent in fertilizer, 31 per cent in automobiles and notable growth in petroleum and mobile phone usage.
The services sector remained a key driver of the economy, growing by 4.9 per cent and contributing nearly 58 percent to GDP. Information and communication services recorded a remarkable 7.52 per cent growth, reflecting the expanding role of the digital economy.
Highlighting fiscal consolidation, the minister said the fiscal deficit was reduced to 0.7 per cent of GDP from 2.6 per cent last year, while primary surplus improved. Federal Board of Revenue collections increased by 10.1 percent and markup payments declined by 23 per cent, creating additional fiscal space, he added.
“Despite global slowdown, where growth declined to 3.1 per cent, Pakistan has outperformed expectations,” Aurangzeb said, reiterating the government’s commitment to sustaining inclusive and broad-based economic growth.
Aurangzeb, while highlighting industrial performance, said the industrial sector recorded 3.51 percent growth, driven mainly by a 6.11 percent expansion in Large-Scale Manufacturing (LSM). Manufacturing activities were supported by macroeconomic stability, a stable exchange rate, easing inflationary pressures and improved business confidence.
The finance minister said the services sector, which accounts for over 58 percent of GDP, expanded by 4.09 percent, led by strong growth in information and communication services.
On fiscal performance, Aurangzeb said the fiscal deficit narrowed sharply to 0.7 percent of GDP during July-March FY2026 from 2.6 percent a year earlier, while the primary surplus improved to 3.2 percent of GDP. Total revenues increased by 10.7 percent to Rs14.8 trillion, supported by growth in both tax and non-tax revenues.
He said inflation remained largely under control during most of the fiscal year, although international oil price increases and supply disruptions resulting from the Middle East crisis exerted pressure in recent months. Average inflation during July-April stood at 6.2 percent.
On the external front, the minister said the current account posted a surplus of $72 million during July-March FY2026, while workers’ remittances increased by 8.2 percent to $30.3 billion. Foreign exchange reserves rose to $21.8 billion by the end of March 2026, helping maintain exchange rate stability.
On debt management, he said the public debt-to-GDP ratio had declined from 75 percent in 2023 to 68.5 percent in FY2026. He added that Pakistan had successfully diversified its financing sources through Panda Bonds and Shariah-compliant Sukuk, while active liability management measures helped reduce debt-servicing costs and refinancing risks.
Referring to tax reforms, the minister said digital production monitoring in the cement and sugar sectors generated around Rs60 billion in additional revenue, while AI-based audit selection and risk-based compliance measures yielded another Rs34 billion, demonstrating the effectiveness of technology-driven reforms in revenue administration.