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Pakistan’s sluggish economy is finally showing strong signs of recovery

The government must continue its agenda for growth by improving policies under SIFC to boost foreign direct investment and tax revenue

Pakistan’s sluggish economy is finally showing strong signs of recovery

There is incredible news from Pakistan’s economic front as multiple key indicators show massive improvements across the board.

The $7 billion IMF bailout package is back on track, while loans from Saudi Arabia, the UAE, and China have been rolled over. Exports, remittances, foreign exchange reserves, and large-scale manufacturing are all experiencing significant growth. The Pakistan Stock Exchange is now the best-performing market in the world.

Key Economic Highlights:

Inflation has dropped to 6.9%, the lowest in 44 months, down from a staggering 38% last year. Interest rates have fallen from 22% to 17.5%, and the 6-month KIBOR rate has decreased to 15.2%, its lowest since June 2022.

Exports increased by 16%, while IT exports surged by 30%. Foreign Direct Investment (FDI) has grown by 56%, and remittances are up by 44%, reaching $5.94 billion. Foreign exchange reserves are at their highest level in 27 months, surpassing $10.5 billion. The Pakistan Stock Exchange has rebounded with a 21% rise in market capitalization, crossing 82,000 points.

This week’s major development is the State Bank of Pakistan's historic buyback of 351 billion rupees in short-term T-bills, aimed at reducing debt costs and improving liquidity. Plus, Moody’s has upgraded Pakistan’s credit rating to Caa2, signaling further economic stability.

The Shehbaz government must continue its agenda for growth by improving policies under SIFC to boost foreign direct investment and tax revenue. Key reforms are needed in state-owned enterprises (SOEs), and the energy sector must be restructured to tackle losses and circular debt. With continued efforts, Pakistan’s economy is on the right track for sustainable growth.

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