In FY25, Pakistan’s economy demonstrated notable resilience, stabilizing amidst challenging global conditions and domestic pressures.
The economic Survey of Pakistan 2024-25 shows that the period was marked by significant improvements in macroeconomic indicators, signalling cautious optimism for future growth prospects, though structural challenges persist.
The Economic Survey of Pakistan shows that the real GDP growth reached 2.68 percent, marginally up from the previous year’s 2.51 percent, indicating moderate economic recovery. However, this growth remains subdued when compared with regional peers, highlighting continued vulnerabilities and constraints within the economic framework.
Inflationary pressures notably eased, with average CPI inflation dropping significantly to 4.7 percent from 26 percent the previous year. This moderation was driven by stringent monetary policies, exchange rate stability, and targeted government interventions to curb speculative activities.
The government’s strategy of utilizing administrative measures, including subsidized essential commodities and expanded social safety nets like the BISP Kafalat program, effectively stabilized consumer prices and provided relief to lower-income segments.
On the consumption front, household consumption moderated slightly but remained the primary driver of aggregate demand, supported by sustained remittance inflows and government cash transfer programs. Public sector consumption also contributed positively, reflecting increased development spending in essential public services.
The current account shifted positively, registering a surplus of $1.9 billion compared to the prior deficit of $1.3 billion. This turnaround was fuelled by increased remittances, particularly from Gulf countries, coupled with sustained export growth in textiles and the burgeoning IT services sector.
Export gains were led by key textile categories such as knitwear, garments, and bedwear, alongside robust IT exports. However, imports continued to outpace exports, maintaining a persistent trade deficit. Foreign exchange reserves increased significantly to $16.64 billion, reflecting enhanced external financial stability supported by multilateral and bilateral partnerships.
Investment trends reflected moderate improvements, with the investment-to-GDP ratio slightly rising to 13.8 percent. Importantly, national savings outpaced total investment for the first time in years, highlighting reduced reliance on external financing and improved domestic resource mobilization.
Public investment surged significantly by 34.2 percent, driven by robust developmental spending in infrastructure, education, and healthcare, including substantial increases in education (171%) and health (51.9%) sectors.
Private investment also rose by approximately 10 percent, reflecting renewed investor confidence, particularly notable in agriculture, small-scale manufacturing, and the services sectors such as wholesale and retail trade and accommodation services.
Sectoral performance revealed varied strengths and weaknesses. The agriculture sector’s modest growth of 0.56 percent indicated ongoing vulnerabilities, exacerbated by significant declines in major crops like wheat, cotton, and maize, despite supportive measures.
Positive contributions came from other crops, livestock, forestry, and fishing sectors. The industrial sector showed a robust recovery, with 4.77 percent growth, driven by significant rebounds in electricity, gas, water supply (28.88%), and construction (6.61%). Manufacturing, however, faced continued constraints due to contractions in large-scale manufacturing, notably in chemicals, iron and steel, and electrical equipment.
The services sector exhibited the strongest growth at 2.91 percent, bolstered by notable expansions in information and communication (6.48%), finance and insurance (3.22%), and public administration (9.92%), solidifying its role as a significant economic contributor.
The persistent trade deficit underscores ongoing vulnerabilities in export competitiveness and heavy import dependency. Initiatives such as URAAN Pakistan and the Special Investment Facilitation Council (SIFC) indicate initiative-taking efforts to tackle these structural issues by promoting export diversification, enhancing digital transformation, and improving investment climates. However, visible results are yet to be seen.
The economic survey paints a cautiously optimistic outlook for Pakistan’s economy, contingent upon sustained reforms and policy continuity.
Anticipated GDP growth acceleration towards 5.7 percent over the medium-term hinges significantly on addressing structural challenges, enhancing productivity, promoting export diversification, and sustaining investment in human capital and infrastructure. These reforms are essential for achieving durable, inclusive, and sustainable economic growth.
However, a critical question remains: Can Pakistan effectively maintain policy continuity and institutional stability to realize these ambitious growth targets amidst persistent internal and external uncertainties?
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.