Pakistan economy shows broad-based recovery across key indicators

June 12, 2026 (MLN): Pakistan's economy has recorded significant improvement across key macroeconomic indicators over the past two years, the finance minister said while presenting the federal budget for fiscal year 2026-27 in the National Assembly on Friday the incumbent government's third consecutive budget.

GDP growth reached 3.7% despite flood-related losses in the current fiscal year and regional spillovers from the Iran-US conflict, with Large Scale Manufacturing expanding at 4.1% the highest rate in four years and the services sector growing at 6.1%.

The size of the economy climbed to $452bn, a new milestone, while per capita income rose from $1,751 to $1,901.

Foreign exchange reserves recovered from $4bn to $17bn, and remittances are on course to reach a historic $41 billion in the current fiscal year after already touching $38 billion in the first eleven months.

On the fiscal side, the deficit narrowed from 7.8% of GDP recorded in June 2023 to a projected 4% by close of the current fiscal year, while the primary balance swung from a deficit of 0.7% of GDP to a surplus of 1.6% a 2.3% point improvement.

The FBR tax-to-GDP ratio widened from 8.5% to 10.3%.

Inflation, which peaked at 23.4%, has been brought down to 4.5%, with the full-year average expected around 7% against a target of 7.5%. Moody's upgraded Pakistan's credit rating during the period, showing the improved macroeconomic and fiscal position.

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