Pakistan’s economy grows 2.7% in FY25, misses 3% target: Economic Survey

Pakistan’s economy grew by 2.68% in the 2025 fiscal year missing the target of 3.0%, according to the Economic Survey of Pakistan released Monday.

The country’s inflation rate dropped sharply from 20.7% in April 2024 to just 0.3% in April 2025, with the average inflation for the fiscal year standing at 4.7% — down from 26% the previous year. Officials credited fiscal discipline, tight monetary policy and exchange rate stabilization for the decline.

A $7 billion International Monetary Fund program, spanning 37 months, helped restore policy credibility and provided financial support for reforms, the report said. Investor confidence improved, with company incorporations rising 27.5%.

Fiscal deficits shrank to 2.6% of GDP from 3.7%, while tax revenues surged by 26.3% to 9.3 trillion rupees ($33.4 billion) during July-April. The current account also shifted from a $1.3 billion deficit to a $1.9 billion surplus, aided by higher exports and record remittances.

The State Bank of Pakistan cut interest rates, boosting private-sector credit and economic activity. Moody’s and Fitch upgraded Pakistan’s credit ratings, reflecting international confidence in its reforms.

Challenges Remain

Despite progress, structural issues persist. A young population demands more jobs, requiring reforms in education, vocational training and labor-intensive sectors like agriculture and manufacturing. Small businesses and regional disparities also need attention for inclusive growth.

The digital economy offers potential, with IT exports benefiting from a skilled workforce. However, weak infrastructure, regulatory hurdles and a lack of digital skills — especially among women and rural communities — limit expansion.

Pakistan’s government emphasized the need to shift from short-term stabilization to long-term reforms. Its economic plan, URAAN, focuses on export-led growth and investment to build a more resilient economy.

"Foundations for recovery are strengthening, but sustaining momentum requires deeper reforms," the report concluded.