Pakistan’s GDP grew by 2.7 per cent in FY25, falling short of the 3.6 per cent target set by the government, according to the Economic Survey 2024–25 presented on Monday. Weak agricultural output and sluggish industrial activity weighed down the overall performance.
Finance Minister Muhammad Aurangzeb, presenting the report ahead of the annual budget, said agriculture grew just 0.56 per cent, while the services sector expanded 2.91 per cent. Industrial output, however, rose 4.77 per cent, though large-scale manufacturing contracted by 1.5 per cent amid rising costs and supply chain disruptions.
Aurangzeb termed the growth a sign of “gradual recovery”, saying the government was avoiding short-term booms in favour of sustainable progress. “We do not want to enter another boom and bust cycle,” he said, adding that major crops, including wheat, maize and cotton, saw a 13.5 per cent decline.
Despite challenges, Pakistan’s nominal economy grew from $372 billion in FY24 to $411 billion. Inflation eased significantly, falling from over 29 per cent in 2023 to 4.6 per cent, while the debt-to-GDP ratio dropped from 68 per cent to 65 per cent.
Aurangzeb said the government saved Rs800 billion to Rs1 trillion on debt servicing due to lower interest rates. The fiscal deficit narrowed to 2.6 per cent of GDP, and the primary surplus stood at 3 per cent. He described debt servicing as the “single largest expense” in the federal budget.
On the external front, the current account posted a surplus of $1.9 billion during July–April, compared to a $1.3 billion deficit in the same period last year. Exports rose 7 per cent, with IT exports hitting $3.1 billion. Imports increased by 11.7 per cent, mainly driven by machinery and transport goods.
Remittances surged to $31 billion, up 30.9 per cent from last year, while investments via Roshan Digital Accounts crossed $10 billion. Tax reforms also yielded results, with the number of individual filers doubling to 3.7 million and high-value filers increasing by 178 per cent.
Aurangzeb reaffirmed the government’s commitment to structural reforms, including revamping the debt management office and advancing privatisation efforts with “renewed vigour”.
The survey comes as Pakistan navigates reforms under a $7 billion IMF programme. The finance minister said the country recently received another IMF tranche, despite diplomatic resistance, and claimed strong support from international partners for its reform agenda.
The federal budget for FY26 will be presented on Tuesday. The National Economic Council has approved a growth target of 4.2 per cent for the next fiscal year, with development spending set at Rs3.483 trillion.
