PR Commentary

PR Commentary
Pakistan Economic Survey 2025-26: Six Takeaways
Growth and Turnaround, but not much

Vani Vyshnavi Jupudi
31 July 2026
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On 11 June 2026, a day before the federal budget, Finance Minister Muhammad Aurangzeb unveiled the Pakistan Economic Survey 2025-26 in Islamabad. Flanked by Planning Minister Ahsan Iqbal and Information Minister Attaullah Tarar, he framed the year as a test of resilience against three external shocks: tariff-related trade uncertainty at the start of the fiscal year, the 2025 monsoon floods, and the Middle East conflict that broke out in the third quarter. The headline was real GDP growth of 3.70 per cent, the highest in four years and up from 3.18 per cent in FY2025, though still short of the government's own 4.2 per cent target. Aurangzeb blamed the miss on the regional conflict, saying growth had been on course to cross 4 per cent before it. His phrase for the year was a move "from stabilisation to growth." Yet the same document records rising poverty, higher unemployment and a shrinking export base, and it was this gap, between the macroeconomic numbers and what reached households, that most of the Pakistani and international commentary fixed on.

Following are the six takeaways.
1. Growth returned, but it was narrow 
Of the 3.70 percentage points, services alone accounted for 2.39, more than agriculture (0.68) and industry (0.64) put together. The single fastest-growing line in the national accounts was general government consumption, up more than 18 per cent, even as the net contribution of exports fell. Agriculture did better than expected, growing 2.89 per cent against 1.53 per cent the year before, with the crop sub-sector clawing back to 1.44 per cent after a contraction based on wheat, rice, and sugarcane. But the shape of the growth matters as much as the number. It came from services and the state's own spending, not from the tradeable, employment-generating sectors, which is why the recovery has not yet added up to structural change.

2. The fiscal turnaround, and how much of it holds
If the survey has a genuinely strong claim, this is it. The fiscal deficit narrowed to 0.7 per cent of GDP during July-March FY2026, down from 2.6 per cent a year earlier, and the primary surplus climbed to 3.2 per cent of GDP, or Rs 4,091.5 billion, which the survey called "historic." Most of that came from a 23.2 per cent drop in markup payments and a 10.1 per cent rise in Federal Board of Revenue (FBR) collection, achieved under the discipline of the International Monetary Fund (IMF) Extended Fund Facility (EFF). The harder question is durability. The FY2027 budget already projects the primary surplus slipping towards 2 per cent as one-off gains, such as elevated State Bank of Pakistan profits, normalise, which suggests the peak of consolidation may have passed.

3. The external account balanced on remittances, not exports
That fiscal discipline was not matched on the trade side. The current account managed a surplus of just USD 72 million, a sharp fall from the USD 1.7 billion of the previous year, and it was remittances that held the line, rising 8.2 per cent to USD 30.3 billion with a record monthly inflow of USD 4.25 billion in May 2026. Exports, meanwhile, went the other way. Merchandise exports fell around 8 per cent and the trade deficit widened to USD 27.9 billion. Aurangzeb reached for the Planning Minister's phrase, an "export emergency," tracing much of the decline to a USD 1.5 billion drop in food exports led by rice and sugar, and to a further USD 1 billion lost to the closure of the border with Afghanistan. On the remittance question he was unapologetic: "This is not an and/or discussion. This is an and/and discussion," treating remittances as a permanent feature of the external position while accepting that exports have to grow.

4. Information technology was the one clear bright spot
The exception to the export weakness came from IT. Information technology (IT) export remittances rose 19.7 per cent to USD 3.38 billion over July-March, and freelancer exports jumped 51 per cent to close on USD 900 million, which is where the government has parked much of its future-growth pitch, alongside a 5G spectrum auction on 10 March 2026 that raised about USD 509.6 million. The scale keeps it honest, though. Indian commentary noted that Pakistan's IT exports for the year are of an order India's IT services sector earns in roughly a fortnight, which says less about the growth rate than about how low the base still is.

5. The recovery did not reach households
This is the takeaway that sits least easily with the rest. Even as the aggregates improved, the poverty rate rose to 28.9 per cent in 2024-25, meaning close to one in three Pakistanis now lives at or below the line, up from 21.9 per cent in 2018-19. Inequality moved the same way, the Gini coefficient rising from 28.4 to 32.7 over that period. Unemployment reached 7.1 per cent and more than 25 million children remain out of school. Growth went up while deprivation deepened, which is the plain version of the "jobless growth" reading that ran through the independent coverage, and it is the hardest fact for the survey's headline to absorb.

6. Inflation eased, but the external shock left it exposed
Prices told a similar story of a good year with a fragile end. Average inflation for July-April FY2026 came in at 6.2 per cent, far below the crisis-era peaks, until the Middle East conflict pushed global oil prices up and it jumped from 7.3 per cent in March to 10.9 per cent in April. The State Bank answered by raising the policy rate to 11.5 per cent. The oil import bill rose by about USD 1 billion in a single month before easing off, a short, sharp reminder of how little it takes for a regional flare-up to reach domestic prices.

To conclude:
Read together, the takeaways describe a real step back from the brink. Growth, the deficit, reserves, and the equity market all moved the right way, and the effort behind them was not trivial. What the survey cannot show is that stabilisation has become development. Growth is being supported by stability rather than by a surge in investment, which remains at a mere 14.4 percent of GDP. Moreover, the underlying structure has not changed: remittances are being relied upon once again; exports are not increasing as much as they did in the past; and even in a strong year, poverty remains high. The document, together with the FY2027 budget, looks more like an exercise to buy time to transform stability into growth and create jobs for the masses. The question for the next year is whether it will be possible. 


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Trump’s visit to Saudi Arabia, Qatar and UAE
May 2025 | CWA # 1678

Gauri Gupta

China in Latin America
China-CELAC forum: Strengthening ties with Latin America and Caribbean
May 2025 | CWA # 1677

GP Team

The World This Week #310-311
China in Latin America and the Carribbean I Trump's Middle East Visit I Denmark as the new Arctic Chair
May 2025 | CWA # 1675

Lekshmi MK

Turkey:
PKK disbands after 40 years of armed insurgency
May 2025 | CWA # 1673

Padmashree Anandhan

Ukraine:
The Discussion in Turkiye and the Elusive Ceasefire
May 2025 | CWA # 1671

Abhiruchi Chowdhury

US, Ukraine and Russia:
Air attacks amidst a Minerals deal and Ceasefire Proposals
May 2025 | CWA # 1670

Fleur Elizabeth Philip

Singapore Elections in 2025:
People’s Action Party (PAP) Wins, Again
May 2025 | CWA # 1667

R Preetha and Brighty Ann Sarah

East Asia:
Tough Tariff Negotiations with the US
May 2025 | CWA # 1666

Padmashree Anandhan

The US-Ukraine
The mineral deal with the US
May 2025 | CWA # 1665
Conflict Weekly # 280-81
India-Pakistan De-escalation I Ukraine Discussion in Istanbul I The Battle over Port Sudan I Disbanding of PKK in Turkiye I France-Algeria Diplomatic Tensions
May 2025 | CWA # 1663

R Preetha

Canada Elections 2025:
What do the results convey? What next for Mark Carney?
October 2024 | CWA # 1480

IPRI Team

July 2024 | CWA # 1413

Ramya B

May 2024 | CWA # 1336

Femy Francis

April 2024 | CWA # 1275

Ramya B

March 2024 | CWA # 1251

NIAS Africa Team

Africa This Week
March 2024 | CWA # 1246

Sivasubramanian K

February 2024 | CWA # 1226

NIAS Africa Team

Africa This Week
November 2023 | CWA # 1148

GP Team

October 2023 | CWA # 1091

Annem Naga Bindhu Madhuri

Issues for Europe
October 2023 | CWA # 1087

PR Team

October 2023 | CWA # 1083

GP Team

August 2023 | CWA # 1049

IPRI Team

July 2023 | CWA # 1012

Bibhu Prasad Routray

Myanmar continues to burn
July 2023 | CWA # 1009

GP Team

December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
December 2022 | CWA # 872

Sapna Elsa Abraham

November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
December 2021 | CWA # 630

GP Team

Europe in 2021
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
August 2021 | CWA # 528

STIR Team

Space Tourism
September 2020 | CWA # 337

Anju Annie Mammen

February 2020 | CWA # 235

Lakshmi V Menon

September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
December 2018 | CWA # 71

Mahesh Bhatta

Nepal
December 2018 | CWA # 70

Nasima Khatoon

The Maldives
December 2018 | CWA # 69

Harini Madhusudan

India
December 2018 | CWA # 68

Sourina Bej

Bangladesh
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer

Afghanistan
July 2018 | CWA # 47

Rahul Arockiaraj

June 2018 | CWA # 26

Siddhatti Mehta