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Pakistan Ends FY2026 with 3.7% Growth as Inflation Remains in Double Digits

Record remittances and international bond sales have strengthened foreign‑exchange buffers even as imported energy costs and a $39.5 billion trade gap keep external risks elevated.

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Photo: AFP
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Overview

  • The finance ministry reported real GDP growth of 3.7% for fiscal year 2025–26, taking the economy to about $452.1 billion and marking the fastest expansion in four years.
  • Headline consumer inflation eased from 11.7% in May to 11.1% in June 2026 but stayed in double digits and the fiscal‑year average was 7.05%, above prior-year levels.
  • External buffers improved as workers’ remittances hit record monthly inflows of roughly $4.3 billion and Pakistan returned to international debt markets with a $750 million Eurobond and a $250 million Panda bond.
  • Trade and investment weaknesses persisted with the PBS reporting a widened FY26 trade deficit of $39.47 billion, falling export earnings and a 28% drop in foreign direct investment for July–May.
  • Market and fiscal indicators strengthened as the KSE‑100 surged about 44% in FY26, net federal revenue rose and a primary surplus was recorded, and the government set a 4% growth target for FY27.