Islamabad, October 27, 2025 – Pakistan’s economy has stayed on the recovery track despite the challenges caused by recent floods, according to the Ministry of Finance’s Monthly Economic Outlook for October 2025.
The report highlights that industrial activity remains strong, led by growth in large-scale manufacturing, cement, and automobile sectors. Exports and remittances continue to improve, while inflation is expected to stay within the 5–6% range despite temporary food supply pressures.
The finance ministry said the IMF’s successful review under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) shows confidence in Pakistan’s reform progress and fiscal management. Global rating upgrades from Fitch, S&P, and Moody’s also reflect renewed investor trust.
Agriculture has been hit by flood losses of around Rs. 430 billion, damaging crops like rice, cotton, sugarcane, and maize. However, early signs of recovery are visible through increased agricultural loans, machinery imports, and fertilizer use.
The large-scale manufacturing sector (LSM) grew by 4.4% in the first two months of FY2026, supported by the automobile and construction industries. Cement dispatches rose 16.2%, while car and truck production jumped sharply.
Inflation rose slightly to 5.6% in September 2025, up from 3% a month earlier, mainly due to education, health, and clothing costs. However, overall inflation in Jul–Sep FY2026 was 4.2%, much lower than last year’s 9.2%.
Pakistan’s federal revenues surged 231% to Rs. 3.26 trillion during Jul–Aug FY2026, driven by higher tax and non-tax income. The federal fiscal balance showed a surplus of Rs. 1.5 trillion, compared to a deficit last year.
On the external side, exports grew 6.5% to $7.9 billion, while remittances increased 8.4% to $9.5 billion, mainly from Saudi Arabia and the UAE. The current account turned into a surplus of $110 million in September 2025.
The Pakistan Stock Exchange (PSX) also continued its strong performance, with the KSE-100 Index reaching 166,553 points by October 22, 2025. Market capitalization stood at Rs. 19.2 trillion, showing investor confidence.
Overseas employment also grew, with over 73,000 workers registered in September, up 43% from August.
Despite climate shocks and temporary inflationary pressures, the government remains focused on maintaining fiscal discipline, supporting agriculture, and promoting sustainable growth.