Planning minister highlights easing inflation, stronger exports, industrial recovery and fiscal consolidation as key signs of economic improvement.
ISLAMABAD: Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal has said Pakistan’s economy has entered a phase of greater stability, but stressed that the government’s next challenge is to convert that stability into sustainable economic transformation under URAAN Pakistan.
Presenting the Monthly Development Update for August, the minister said the government was committed to providing a regular and transparent assessment of the country’s economic position, progress and challenges.
Ahsan Iqbal said Pakistan had undergone a difficult period of economic adjustment and that the stability achieved in recent years had been hard-earned.
“Through URAAN Pakistan, our focus is now to translate this stability into sustainable economic transformation, with exports as a key driver, leading to more jobs, better incomes, greater opportunities for our youth and an improved quality of life for the people of Pakistan,” he said.
Inflationary pressures ease
The minister said the beginning of FY2026-27 had produced encouraging economic signals, with Consumer Price Index (CPI) inflation easing to 9.2% in July 2026, compared with 11.7% in May.
He said the moderation suggested that price pressures had started to ease, while the year-on-year increase from 4.1% largely reflected the base effect and the pass-through of global food and energy prices.
The government, he added, was monitoring prices through regular meetings of the National Price Monitoring Committee, focusing on supply chains, the quality of essential commodities and timely administrative measures to keep necessities affordable.
Remittances strengthen external position
Workers’ remittances reached $3.6 billion in July 2026, up 13% from $3.2 billion in the same month of 2025.
The minister said the strong start followed record remittances of $41.6 billion during FY2025-26.
He noted that remittances not only strengthened foreign exchange reserves but also supported millions of Pakistani households and demonstrated the continuing contribution of overseas Pakistanis to the economy.
LSM records strong recovery
Industrial activity also showed a significant recovery, with Large-Scale Manufacturing (LSM) registering average growth of 5.0% in FY2025-26, compared with a contraction of 0.7% in the previous fiscal year.
The recovery was broad-based, with 16 of 22 sectors recording positive growth.
Automobiles recorded the strongest growth at 57.8%, followed by transport equipment at 42.4%, electrical equipment at 14.3%, tobacco at 12.6% and food at 7.0%.
Ahsan Iqbal said the improvement in industrial production was important for increasing domestic output, creating jobs and generating exportable surpluses.
Exports and ICT earnings increase
Pakistan’s external sector also started FY2026-27 on a positive note.
Goods exports rose 9.4% to $3.0 billion in July 2026, compared with $2.8 billion a year earlier. Total exports of goods and services increased 13% to $3.9 billion from $3.5 billion.
Growth was recorded in surgical goods, food, leather goods and textiles, which increased by 16.3%, 8.0%, 7.8% and 3.9%, respectively.
ICT exports also continued to strengthen, reaching $417 million in July 2026, highlighting the growing contribution of technology and digital services to Pakistan’s export earnings.
Imports of goods and services increased 13% to $7.3 billion from $6.5 billion. Despite higher imports, the current account deficit narrowed to $328 million in July 2026 from $529 million in July 2025.
FBR revenue rises 8.4%
Ahsan Iqbal said fiscal consolidation remained a key component of the government’s economic reform programme.
FBR tax collection increased 8.4% to Rs820.9 billion in July FY2026-27, compared with Rs757.4 billion in the corresponding month of the previous year.
The minister also highlighted a major improvement in the overall fiscal position, saying the fiscal deficit narrowed to 2.6% of GDP in FY2025-26, compared with 5.4% in FY2024-25.
He described it as the lowest fiscal deficit recorded in two decades.
Rs211.3bn authorised for development projects
The government is pursuing a more focused approach to public investment, with development resources being directed towards projects expected to deliver greater economic and social returns under URAAN Pakistan.
Under the Finance Division’s release strategy, the Ministry of Planning authorised Rs211.327 billion, equivalent to 21.1%, during July 2026 for priority development projects.
Ahsan Iqbal said every rupee spent on public development must deliver maximum value for money.
The Central Development Working Party (CDWP) considered 27 agenda items during July, including 22 projects, four position papers and one concept clearance proposal.
Nine projects, three position papers and one concept clearance proposal were approved, while nine projects were recommended to the Executive Committee of the National Economic Council (ECNEC).
Three projects were deferred, while one project and one position paper were returned to their sponsors for further consideration.
Projects approved during the month are expected to generate around 7,851 direct and 14,053 indirect jobs.
A comprehensive review of CDWP projects also resulted in the removal of non-essential components, generating Rs1.02 billion in savings during July.
Human capital remains key priority
The minister said human capital development remained central to Pakistan’s long-term economic transformation.
On World Population Day, the government reaffirmed its commitment to addressing population-related challenges through investment in health, education, skills and women’s empowerment.
With Pakistan’s population standing at 254.6 million, he said strengthening human capital was essential to harnessing the demographic dividend and achieving inclusive growth.
The minister also highlighted initiatives aimed at improving regional connectivity and logistics.
The 68th meeting of the National Logistic Board reviewed the operational and financial performance of the National Logistics Corporation and considered measures to expand transit trade hubs, upgrade border infrastructure and reduce trade costs.
He also noted the launch of the 50th issue of Development Advocate Pakistan, titled “A Nation at a Turning Point”, which focuses on policy continuity, evidence-based planning and human capital development.
Ahsan Iqbal said that with 67% of Pakistan’s population below the age of 30, investment in young people was crucial for the country’s future.
He said the government’s initiative to train one million young people as “Ambassadors of Social Change” was part of its broader human capital agenda.
The minister concluded that while the latest economic indicators were encouraging, sustaining progress would require continued fiscal discipline, stronger exports, productive investment, human capital development and institutional reforms.
He said the government remained committed to turning economic stability into a durable foundation for inclusive growth, employment creation and improved living standards under URAAN Pakistan.