Pakistan Economy FY25 Snapshot Stability Returns, Growth Still Fragile
The FY25 snapshot of Pakistan’s economy shows welcome relief after years of stress. The country moved away from crisis mode and regained basic stability. However, daily life improved only slightly for most people.
International financing helped calm markets and restore confidence. Inflation slowed sharply, which eased pressure on household budgets. As a result, policymakers gained some breathing room.
Economic output grew by 2.7 percent during the year. Industrial activity led the recovery, showing a strong rebound. In addition, nominal output crossed $400 billion for the first time.
However, growth missed the official target. Experts say stability alone cannot lift incomes or create enough jobs.
Stability improves, risks remain
Inflation stayed within the central bank’s target range for several months. Therefore, interest rates moved lower as price pressures eased. The central bank cut rates three times during the year.
Foreign reserves also recovered from dangerous lows. Support from global lenders played a key role. Worker remittances and weak imports kept external pressures manageable.
Economists welcomed the progress but urged caution. Investment levels remain low, while productivity lags behind peers. Moreover, consumption still dominates economic activity.
Trade pressures returned as imports rose with improving stability. This trend highlights ongoing balance of payments risks. As a result, experts stress the need for export led reforms.
Reforms, markets, and the road ahead
A major policy signal came from the airline privatisation. Investors viewed the move as a serious reform test. In addition, tax and energy changes aimed to reduce waste.
Credit rating agencies upgraded Pakistan during the year. They cited better reserves and lender support. Still, they warned that growth remains too slow.
Gold emerged as the top investment performer. Local prices surged sharply during the year. Meanwhile, technology exports reached record levels and created new opportunities.
Digital policy also shifted in surprising ways. Authorities explored blockchain regulation and digital assets. However, legal clarity remains a work in progress.
Looking ahead, economists say the real test lies beyond stability. Sustainable expansion needs exports, energy reform, and investor trust. Therefore, the choices made next year will matter most.
