Pakistan’s economy is witnessing a sustained recovery, driven by declining inflation, surging remittances, and a rebound in exports, according to the Ministry of Finance’s Monthly Economic Update and Outlook for November.
During the first four months of FY2025, inflation fell sharply to 8.7%, a significant drop from 28.5% in the same period last year. October’s YoY inflation was recorded at 7.2%, indicating continued price stability. Analysts attribute this to easing global commodity prices, stable energy tariffs, and prudent monetary policy, with the State Bank recently cutting the policy rate by 250 basis points to 15%.
Remittances surged by 34.7%, reaching $11.9 billion, primarily from Saudi Arabia, while IT exports climbed by 34.9% to $1.2 billion. Additionally, the current account posted a surplus of $218 million in July-Oct FY2025, compared to a $1.5 billion deficit in the same period last year, marking three consecutive months of surpluses.
In the industrial sector, Large Scale Manufacturing (LSM) demonstrated resilience despite a 0.8% contraction during Jul-Sep FY2025, a slight improvement from the 1.0% decline last year. The auto sector showed robust growth, with car production up 51% and truck and bus production soaring by 80%. However, cement dispatches dropped 7.9%, reflecting ongoing challenges in the construction sector.
Agriculture is also receiving attention, with the government focusing on wheat self-sufficiency. Wheat sowing is progressing well, and fertiliser off-take rose 92.2% for DAP during October, supported by Punjab’s interest-free loans through the Kissan Card.Â
On the fiscal front, federal revenues surged by 186% to Rs 4,019 billion, driven by a Rs 2,500 billion surplus profit from the State Bank. This led to a fiscal surplus of Rs 1,896 billion, equivalent to 1.5% of GDP, reversing last year’s deficit.
The government remains optimistic about continued recovery, projecting inflation to stabilise between 5.8% and 6.8% by December, while exports, imports, and remittances are expected to maintain their upward trajectory in the coming months.
