Finance Minister Mohammad Aurangzeb unveils the annual economic document, highlighting improved fiscal discipline, robust remittances, and structural reforms
ISLAMABAD: Federal Minister for Finance and Revenue Mohammad Aurangzeb on Thursday formally launched the Pakistan Economic Survey 2025–26, outlining the country’s macroeconomic performance over the outgoing fiscal year, anchored by a GDP growth rate of 3.70 per cent.
The national economy accelerated its growth momentum during the 2026 fiscal year (FY26), expanding by 3.70 per cent compared to the 3.18 per cent growth recorded in the previous fiscal year.
According to the survey, this economic improvement is primarily attributed to effective macroeconomic management, a healthier fiscal account, robust growth in the Large-Scale Manufacturing (LSM) sector, the notable resilience of the agricultural sector following the devastating floods of 2025, exchange rate stability, and sweeping structural reforms implemented under the International Monetary Fund (IMF) Extended Fund Facility (EFF) programme.
Middle East Crisis Triggers Inflationary Pressures
Despite positive growth indicators, the survey noted a recent spike in consumer prices. Headline inflation rose sharply from 7.3 per cent in March 2026 to 10.9 per cent in April 2026. Officials attributed this sudden surge to escalating global oil prices and severe supply chain disruptions triggered by the ongoing Middle East crisis.
Furthermore, average inflation for the July–April FY26 period was recorded at 6.2 per cent, which sits higher than the 4.7 per cent registered during the corresponding period of the previous fiscal year.
Strict Fiscal Discipline slashes Budget Deficit
A standout achievement detailed in the economic document is Pakistan’s vastly improved fiscal discipline. The federal government achieved a marked reduction in the fiscal deficit, which plummeted to just 0.7 per cent of GDP during July–March FY26, down from 2.6 per cent of GDP during the same period last year.
Key Fiscal and External Indicators (FY25 vs FY26)
| Economic Indicator | July–March FY 2024–25 | July–March FY 2025–26 |
| GDP Growth Rate (Full Year) | 3.18% | 3.70% |
| Fiscal Deficit (% of GDP) | 2.6% | 0.7% |
| Primary Surplus (% of GDP) | 3.0% | 3.2% |
| Current Account Balance | US $1.7 billion (Surplus) | US $72 million (Surplus) |
| Workers’ Remittances | — | US $30.3 billion (+8.2%) |
This aggressive fiscal consolidation is largely driven by a double-digit growth in both tax and non-tax revenues, coupled with a significant, highly welcomed decline in national mark-up expenditures. Consequently, the country’s primary surplus climbed to 3.2 per cent of GDP, up from the 3.0 per cent recorded last year.
Remittances Anchor the External Sector
On the external front, Pakistan managed to maintain a positive balance, though the margin narrowed considerably. The current account recorded a marginal surplus of US $72 million during the July–March FY26 period, compared to a much larger surplus of US $1.7 billion during the same period of the prior year.
Crucially, workers’ remittances remained the absolute backbone of Pakistan’s external sector stability. Inflows from overseas Pakistanis rose by 8.2 per cent to reach a substantial US $30.3 billion, providing vital liquidity to safeguard foreign exchange reserves and cushion the local currency.
