ISLAMABAD — The Ministry of Finance released its final economic outlook report for the fiscal year 2024-25 on Monday, presenting a mixed picture of Pakistan’s economy marked by modest growth, easing inflation, and a sharp rise in labour migration abroad.
According to the report, real GDP grew by 2.7% during FY25, supported by improved macroeconomic indicators, prudent fiscal management, and an uptick in remittance inflows. However, the growth figure has drawn scrutiny from independent economists who dispute the accuracy of the estimate. Finance Minister Muhammad Aurangzeb had previously announced plans to form an expert committee to assess the data, but no further developments have occurred on that front.
Despite the growth claim, the report also documented a sharp increase in overseas job migration. In May 2025 alone, 59,995 workers were registered for overseas employment — a 12.7% increase from April. From January to May, a total of 285,370 individuals left the country in search of work, with most heading to Saudi Arabia and the majority hailing from Punjab province, according to data from the Bureau of Emigration & Overseas Employment.
The rise in migration, along with a shift from informal to formal money transfer channels, contributed to a 28.8% increase in remittances, which reached $34.9 billion during the first 11 months of FY25. Inflows from Saudi Arabia and the UAE were notably strong, growing by 20.4%.
The ministry noted that inflation had steadily declined, clocking in at 3.5% in May and expected to remain between 3% and 4% for June. Average inflation for FY25 stood at 4.49%, a sharp drop from 23.41% the previous year. The food segment contributed significantly to this decline, aided by falling wheat prices and controlled costs of vegetables. However, some analysts argue that the benefit of lower inflation has not yet translated into meaningful improvements in real incomes or employment prospects.
Despite the easing inflation, the central bank opted to maintain the policy rate at 11% in its latest Monetary Policy Committee (MPC) meeting. The MPC cited inflation risks, external imbalances, and geopolitical uncertainties as justification. The decision has faced criticism from several quarters, who argue that elevated interest rates disproportionately benefit commercial banks while stifling business investment and growth.
On the production side, the ministry projected a positive outlook for Large-Scale Manufacturing (LSM) based on indicators like rising cement dispatches and automobile sales. In April 2025, LSM grew by 2.3% year-on-year but declined by 3.2% compared to the previous month. Cumulatively, LSM contracted by 1.5% over the first 10 months of the fiscal year. The government needs the sector to grow by over 8% during May and June to meet its overall growth target, the report acknowledged.
Twelve of the 22 LSM sectors showed positive growth, including textiles, apparel, beverages, pharmaceuticals, and petroleum products.
The external sector showed signs of recovery, with the current account recording a surplus of $1.8 billion in July–May FY25, compared to a deficit of $1.6 billion in the same period last year. Remittances and a modest 4% increase in goods exports to $29.7 billion played a role in this turnaround. However, imports rose by 11.5% to $54.1 billion, widening the trade deficit to $24.4 billion from $20 billion the year before.
The ministry reaffirmed its commitment to structural reforms in tax harmonisation, energy pricing, and privatisation. It also pledged to accelerate climate action through targeted initiatives aimed at inclusive and sustainable development.
In the agriculture sector, the government has set a target of cultivating 2.2 million hectares of cotton and producing 10.2 million bales during the Kharif season 2025–26. This comes after a 31% drop in cotton output last year. The ministry attributed improved farm input utilisation to better access to seeds, credit, machinery, and fertilisers.
While the report emphasized macroeconomic stability and improved fiscal indicators, it also implicitly acknowledged a key challenge: the disconnect between headline economic performance and everyday realities. The continued exodus of workers abroad suggests that domestic job creation remains weak despite the apparent improvement in economic fundamentals.
As the country enters a new fiscal year, the government faces the dual challenge of converting stabilisation into sustained growth and ensuring that the benefits of macroeconomic progress reach the broader population.
