ISLAMABAD: Inflation is projected to remain moderate, in the range of 5.5 to 6.5 percent in December, primarily due to the base effect, the Finance Division said.
In its ‘Monthly Economic Update and Outlook December 2025’ released on Wednesday, the Division noted that inflow of Foreign Direct Investment (FDI) declined sharply by 25.3 percent in the first five months (July-November) of fiscal year 2026, compared to the same period last year.
FDI totaled USD927.4 million during the July–November fiscal year 2026, down from USD1.242 billion in the corresponding period of fiscal year 2025.
READ MORE: Jul-Nov FDI down 25% to roughly $1billion YoY
The decline was also witnessed in November2025 FDI when it came down to USD179.7 million against USD231.9 million in November 2024 – a decline of 22.5 percent. Main sources were China (USD308.4 million) and Hong Kong (USD143.3 million). Sector-wise, power (USD383.8 million) and financial services (USD327.6 million) attracted the most FDI.
Total foreign investment dropped substantially to USD313.7 million in July–November 2026, down from USD1.391 billion a year earlier. Portfolio investment swung back into negative territory at –USD613.8 million, compared with a positive USD148.7 million in the same period last year.
During November, it decreased to USD-75 million, when compared to USD-37 million during the same month of last year.
Private and Public Foreign Portfolio Investment recorded net outflows of USD192.2 million and USD421.6 million, respectively. As of December 19, 2025, foreign exchange reserves stood at USD 21.0 billion, including USD 15.9 billion with the SBP.
Remittances were up 9.3 percent to USD 16.1 billion, led by inflows from Saudi Arabia (24.2%) and the UAE (20.8%). Monthly inflows for November reached USD3.188 billion, up 9.4 percent when compared to USD 2.915 billion during the same month of last year.
The report noted that Consumer Price Index (CPI) inflation recorded at 6.1 percent on a year-on-year (YoY) basis in November 2025 as compared to 6.2 percent in the previous month and 4.9 percent in November 2024. On a month-on-month (MoM) basis, it increased by 0.4 percent as compared to an increase of 1.8 percent in the previous month and an increase of 0.5 percent in November 2024.
The Large-Scale Manufacturing (LSM) registered a growth of 5.02 percent during Jul-Oct FY2026 with 16 sectors recording positive growth, including textile, wearing apparel, non-metallic mineral products, food, coke & petroleum products, electrical equipment, automobile, and tobacco. In October 2025, LSM grew by 8.3 percent on a YoY basis and by 3.7 percent on a MoM basis.
Cumulative cement dispatches reached 21.4 million tonnes, up 11.5 percent during Jul-Nov FY2026. Domestic dispatches totaled 17.4 million tonnes, with a 14.7 percent YoY increase, while exports remained nearly flat at 4.01 million tonnes.
The report noted that prudent fiscal management of the government has yielded a fiscal surplus during the first four months of FY2026. With a growth of 7.7 percent in gross federal receipts and a decline of 4.8 percent in total expenditure, the government has achieved a consolidated fiscal surplus of 1.0 percent of GDP during Jul-Oct FY2026 as compared to 0.4 percent during the same period of last year.
Similarly, a primary surplus of 2.7 percent of GDP has been recorded during this period, the same as last year.
During Jul-Nov FY2026, the FBR collected Rs. 4,734 billion with a growth of 10.2 percent over the tax collection in the corresponding period of last year. Direct tax collection grew by 10.5 percent, while sales tax, federal excise duty, and customs duties rose by 8.5 percent, 18.2 percent, and 10.1 percent, respectively.
In November 2025, the current account (CA) recorded a surplus of USD 100 million while posting a deficit of USD 812 million during Jul-Nov FY2026.
During the same period last year, CA recorded a surplus of USD 503 million. Export of goods declined by 3.2 percent to USD 12.8 billion, while imports increased by 11.1 percent to USD 25.6 billion, resulting in a trade deficit of USD 12.8 billion compared to USD9.8 billion during the same period last year.
The Monetary Policy Committee, in its meeting held on December 15, 2025, decided to reduce the policy rate by 50 bps to 10.5 percent, supported by sustainable economic growth and price stability.
During 1st Jul–28th Nov FY2026, money supply (M2) contracted by 0.1 percent as compared to a contraction of 1.1 percent last year. Within M2, Net Foreign Assets of the banking system increased by Rs. 142.9 billion as compared to an increase of Rs. 495.1 billion last year. Whereas, Net Domestic Assets of the banking sector decreased by Rs. 168.2 billion compared to a decrease of Rs. 901.3 billion last year.
Under the net borrowing for budgetary support, the government retired Rs. 804.7 billion against the retirement of Rs. 2,166.9 billion last year. The Private Sector borrowed Rs. 186.8 billion compared to Rs. 1,300.7 billion last year. Pakistan Stock Exchange witnessed a strong recovery in November 2025.
The KSE-100 Index gained 5,046 points, closing at 166,677, reflecting improved investor confidence and renewed buying interest. Market capitalization increased by Rs. 305 billion, reaching Rs. 18,866 billion by the end of the month.
During July-November FY2026, the Bureau of Emigration & Overseas Employment registered 349,850 workers for overseas employment. However, in November 2025, registrations declined by 21.4 percent to 71,237 workers, down from 90,339 in October 2025.
The Pakistan Poverty Alleviation Fund (PPAF), in partnership with 26 organizations, disbursed 5,657 interest-free loans amounting to Rs. 356 million during November 2025. Cumulatively, since 2019, Rs. 121.5 billion has been disbursed to beneficiaries.
Under the Benazir Income Support Programme (BISP), expenditures amounted to Rs. 143.5 billion during July-October FY2026, reflecting a 26.8 percent increase compared to the corresponding period last year.
Copyright Business Recorder, 2026