Pakistan poised for sustainable growth as inflation eases and reserves surge

October 17, 2025 (MLN): Pakistan’s economy is showing clear signs of recovery, with inflation sharply declining, foreign exchange reserves strengthening, and growth gaining momentum.

Sustained fiscal discipline and prudent monetary management have brought stability to the macroeconomic environment, setting the stage for renewed investment and stronger economic expansion in the coming years, said a press release by the External Communication Department.

These encouraging developments were highlighted by Governor SBP Jameel Ahmad during a series of meetings with senior executives from leading global financial and investment institutions including JP Morgan, Standard Chartered, Jefferies, Barclays, Citibank, and Bank of America Securities as well as representatives of major credit rating agencies. 

The engagements took place on the sidelines of the IMF–World Bank Annual Meetings held in Washington, D.C., from October 13 to 18, 2025.

Governor Ahmad noted that headline inflation has fallen to 5.6 % in September 2025, a significant improvement from the double-digit levels observed two years ago, while core inflation has dropped from over 22 % to below 8 %. 

Despite the impact of recent floods, inflation is expected to remain within the 5–7 % target range over the medium term.

On the external front, he highlighted substantial improvements in Pakistan’s foreign exchange (FX) position, with the SBP purchasing $20 billion from the interbank market over the past three years to strengthen reserves now five times higher than their February 2023 low. 

Forward liabilities have also decreased, while public sector external debt has risen only marginally since June 2022. The central bank aims to raise FX reserves further to $17.5 billion by June 2026.

Economic growth has also begun to rebound, reaching 3 % in FY25 and projected to accelerate to between 3.25 and 4.25 % in FY26, despite challenges from natural disasters. 

The Governor further shared progress under the SBP’s Vision 2028 Strategic Plan, emphasizing advancements in financial stability, inclusion, and access to finance for small businesses and women.

Ahmad further stated that the positive impact of structural reforms and disciplined policy measures is now evident through contained inflation, an improved current account, and a more resilient growth path. 

With ongoing support from international partners such as the IMF and World Bank, Pakistan is poised to transition toward sustainable, inclusive, and durable economic growth.

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