Overview
- The State Bank of Pakistan raised its FY26 projection to 3.75–4.75% in January, and Governor Jameel Ahmad says growth could reach the top of that range.
- Officials say the gap with the IMF reflects timing differences, with the Fund’s latest outlook incorporating flood-impact assessments.
- SBP cites 3.7% GDP growth in Q1 FY26, 6% large-scale manufacturing growth from July to November, resilient agriculture, and January inflation easing to about 5.8%.
- Financial conditions have loosened after cumulative policy-rate cuts of roughly 1,150 basis points since June 2024, while the benchmark rate was held at 10.5% last month.
- Exports fell in the first half due to lower global prices and border disruptions, but strong remittances are expected to keep the current-account deficit within 0–1% of GDP as the bank rebuilds reserves through FX purchases and the government plans panda bonds to diversify financing under the IMF programme.