Pakistan's economy grew at 3.7 per cent during the current fiscal year (FY26), missing the original target of 4 per cent but achieving the highest growth in the past four years, Finance Minister Muhammad Aurangzeb announced on Thursday.
Key Economic Highlights
Launching the Pakistan Economic Survey (PES) for FY2025-26 at a press conference ahead of presenting the national budget on Friday, Aurangzeb claimed that Pakistan's economic growth exceeds the global average of 3.1 per cent. He attributed the shortfall primarily to the ongoing conflict in West Asia.
The current fiscal year ends on June 30. The minister stated that GDP growth in FY26 was recorded at 3.7 per cent, lower than the 4 per cent target set at the beginning of the year.
Historical Growth Comparison
"The 3.7 per cent growth is the highest in the past four years. The GDP growth was -0.2 per cent in FY2023, 2.6 per cent in FY2024, and 3.2 per cent in FY2025," the finance minister said.
Elaborating on the reason for missing the 4 per cent growth target, he cited the ongoing conflict in West Asia. "But having said that, we have still reached a historically high size of the economy at Pakistani rupees (PKR) 126.9 trillion ($456 billion)," he added.
He further noted that floods in August and September 2025 also impacted growth. "These challenges tested Pakistan's resilience," he said, adding that the government dealt with them and "remained committed to from stabilisation to growth."
Fiscal and External Sector Performance
The minister stated that the fiscal deficit narrowed to 0.7 per cent of GDP (PKR 856.4 billion) from 2.6 per cent of GDP (PKR 2,970 billion) in the corresponding period last year. Similarly, the primary surplus improved to 3.2 per cent from 3 per cent, according to the survey document.
Aurangzeb said that tax revenues increased by 10.1 per cent, while markup payments decreased by 23 per cent, which he said increased fiscal space.
Regarding stabilisation, he noted that foreign exchange reserves stood at over $17 billion and are expected to reach $18 billion by the end of the fiscal year on June 30, equivalent to three months of imports—a globally accepted yardstick for stability.
Aurangzeb highlighted that last month Pakistan received a record $4.3 billion in remittances, with total remittances in the first 11 months crossing $33 billion.
Sectoral Growth Breakdown
Providing a sector-wise breakdown, he said agriculture grew at 2.89 per cent against the target of 2 per cent, higher than the 1.53 per cent recorded in the last fiscal year.
Large-scale manufacturing registered 6.1 per cent growth, the highest in four years. The services sector, which accounts for nearly 58 per cent of GDP, grew by 4.9 per cent. "This, too, is the highest in the last four years," he said.
The minister noted that more than 3,000 new companies were registered during the current fiscal year, reflecting positive business sentiment. The total number of registered companies now stands at approximately 300,000.
Inflation remained at 6.2 per cent during the year, compared to 4.7 per cent in the same period last year.
