Islamabad, January 28, 2025 – On Tuesday, the Ministry of Finance released its half-yearly report for the fiscal year 2024-25 (July-December), presenting an optimistic outlook for Pakistan economy.
The report emphasizes that, with a series of sustained reforms and the nation’s resilience in the face of economic challenges, Pakistan is on a trajectory toward greater economic stability and future prosperity.
The document highlights Pakistan remarkable adaptability to both global and domestic economic shifts. It underscores the positive strides made in key sectors, particularly as a result of targeted reforms, prudent fiscal management, and strategic governmental interventions. These efforts have significantly contributed to the ongoing stabilization of Pakistan’s economic foundations.
One of the report’s key assertions is the effectiveness of fiscal consolidation measures, which, combined with a disciplined debt management strategy, are expected to continue reducing the country’s debt-to-GDP ratio. This strategic approach is seen as crucial for maintaining fiscal discipline and ensuring long-term economic health. Additionally, the external sector has made significant progress in balancing trade dynamics, with remittance inflows and foreign investments playing a pivotal role in strengthening the country’s external accounts. A stable foreign exchange reserve position further solidifies the foundation for continued economic stability.
Despite global challenges, including the modest recovery in international trade and rising geopolitical uncertainties, Pakistan’s economy is showing clear signs of sustainable growth. Inflationary pressures have eased, policy rates are declining, and commodity prices have remained stable, all of which create an ideal environment for investment and private-sector expansion. However, the report also points out that persistent challenges such as structural imbalances, fiscal rigidity, and high public debt require continued attention and reform efforts.
Looking ahead, the economic outlook for Pakistan remains encouraging, with macroeconomic fundamentals stabilizing and key sectors gradually recovering. Inflation is anticipated to stabilize near the long-term target of 7 percent in the coming quarters, fostering conditions that will support greater economic activity. This expected stability is also likely to lead to further reductions in policy rates, which would lower borrowing costs for businesses and consumers alike. As a result, investment is projected to rise, particularly in large-scale manufacturing (LSM) and services, which are expected to be significant drivers of growth this year.
Trade dynamics are forecasted to improve, with both exports and imports growing due to increased volumes, thus stimulating broader economic activity. Remittance inflows are expected to remain robust, contributing to a more stable external account and driving household consumption. On the fiscal front, a substantial decline in markup expenditures—bolstered by lower borrowing costs—will enhance fiscal sustainability and provide room for further recovery-focused initiatives. This trend not only strengthens public finances but is also anticipated to contribute to a reduction in unemployment as economic activity accelerates.
In summary, the report paints a promising picture of Pakistan’s economic future, with a carefully managed fiscal strategy, a recovering external sector, and ongoing reforms poised to support sustainable growth and broader economic stability.