Islamabad, September 30, 2025 – The Ministry of Finance has declared that Pakistan’s economy continues to demonstrate resilience, even in the wake of devastating floods that have disrupted agricultural activity and food supply chains across the country.
In its Monthly Economic Outlook released on Tuesday, the ministry highlighted that overall economic momentum remains intact, supported by robust performance in large-scale manufacturing, rising remittances, and disciplined fiscal management.
According to the report, the rebound in cement dispatches, automobile production, and allied industries suggests that industrial activity will remain strong in the coming months. The external sector is expected to stay manageable, with exports showing signs of recovery and remittances providing much-needed support. Declining global commodity prices may further ease the import bill, though temporary inflationary pressures could surface due to flood-related food shortages. Even so, inflation is projected to remain contained within the 3.5–4.5 percent range during September 2025.
The finance ministry noted that Pakistan’s economy has maintained a trajectory of stabilization and growth during the first two months of FY2026. Large-scale manufacturing recorded positive growth, while CPI inflation eased significantly compared to the same period last year. Fiscal consolidation also continued, driven by higher revenue mobilization and effective expenditure management, resulting in a primary surplus. Meanwhile, the Pakistan Stock Exchange sustained its bullish trend, reflecting growing investor confidence in the economy.
Agriculture, however, faces major challenges due to ongoing flood damages. Assessments of Kharif crops and livestock losses are underway, and the government has already declared a nationwide agriculture emergency. Despite these challenges, agricultural financing surged, with credit disbursements rising nearly 20 percent in Jul-Aug FY2026. Imports of farm machinery also increased, signaling long-term resilience in the sector. Fertilizer uptake remained robust, with both urea and DAP usage surpassing last year’s levels.
On the industrial front, large-scale manufacturing posted a year-on-year growth of 9 percent in July 2025. The automobile sector was particularly strong, with car production doubling and trucks, buses, and pickups showing double-digit gains. Cement dispatches also rose sharply, supported by both domestic consumption and exports.
Price stability improved as well. CPI inflation moderated to 3 percent in August 2025, a sharp decline compared to double-digit levels last year. The Sensitive Price Index also showed stability, with fewer essential items registering price hikes.
Fiscal discipline has remained a cornerstone of the government’s economic management. Revenues rose due to higher non-tax collections, particularly petroleum levy and dividends, while expenditures were carefully managed. This resulted in the lowest fiscal deficit in eight years and the highest primary surplus in 24 years.
The external sector also delivered encouraging signals. Exports climbed over 10 percent, supported by strong demand for textiles, garments, and bedwear. Meanwhile, remittances increased 7 percent to $6.4 billion, led by inflows from Saudi Arabia and the UAE. Net foreign direct investment also showed improvement, with China and Hong Kong being key contributors.
Looking ahead, the finance ministry cautioned that while floods may temporarily disrupt food supplies and fuel inflation, the broader outlook remains stable. Continued fiscal prudence, steady remittance inflows, and robust industrial performance are expected to anchor Pakistan’s economy in the months ahead.