Pakistan's Economy Shows Resilience in FY 2025: PES

Islamabad, June 9, 2025 – The Pakistan Economic Survey 2024-25, released by the Pakistan government, highlights a year of macroeconomic stabilization and modest growth despite global economic challenges. The survey reports a real GDP growth of 2.68% for FY 2025, signaling a steady recovery and positioning the economy for a potential take-off in the medium term.

Key Economic Highlights

GDP and Sectoral Growth: The economy grew by 2.68%, with the services sector leading at 2.91%, followed by industry at 4.77%, and agriculture at a modest 0.56%. The services sector, driven by wholesale, retail trade, and finance, showed consistent improvement, while industrial growth was bolstered by a rebound in large-scale manufacturing, particularly in automobiles and export-oriented industries. Agriculture faced challenges due to a decline in major crop production, though other crops like fruits and vegetables grew by 4.78%.
Inflation and Monetary Policy: Inflation dropped significantly to a record low of 0.3% in April 2025, down from 17.3% the previous year, with average CPI inflation at 4.7% for July-April. Tight monetary policies, exchange rate stability, and administrative measures like curbing hoarding and expanding subsidized markets contributed to this decline.
Fiscal Performance: The fiscal deficit narrowed to 2.6% of GDP from 3.7%, and the primary surplus reached Rs 3,468.7 billion (3.0% of GDP). Tax revenues surged by 26.3%, and non-tax revenues rose by 68%, driven by higher profits from the State Bank of Pakistan and petroleum levies.
External Account: The current account recorded a surplus of US$ 1.9 billion during July-April FY 2025, reversing a US$ 1.3 billion deficit from the previous year. Strong remittance inflows, particularly from Saudi Arabia and the UAE, and steady export growth in textiles offset a rise in essential imports. Foreign exchange reserves improved to US$ 16.64 billion by May 27, 2025.
Investment and Savings: National savings stood at 14.1% of GDP, outpacing investment at 13.8%, resulting in a foreign savings surplus of 0.4%. Private investment grew by 9.9%, and public investment, including government development spending, rose by 34.2%. Gross Fixed Capital Formation (GFCF) reached Rs 13,814.7 billion, up 15.0% from FY 2024.
AI and Economic Transformation: The survey emphasizes Pakistan’s potential to leverage AI for economic growth, highlighting its young demographic and digital consumer base. However, it notes gaps in digital infrastructure and skills, with the government prioritizing reforms under the National Economic Transformation Plan to enhance AI readiness.

Global Context and Challenges

Globally, economic growth is projected to slow to 2.8% in 2025, per the IMF’s World Economic Outlook, due to trade tensions, protectionist policies, and geopolitical uncertainties. Pakistan faces risks from reduced export demand and volatile financial markets but is mitigating these through fiscal consolidation, energy pricing reforms, and initiatives like the Special Investment Facilitation Council (SIFC) and the URAAN Pakistan plan.

Outlook

The survey underscores Pakistan’s commitment to structural reforms, including tax base expansion, privatization, and climate finance initiatives like the Green Sukuk. With ongoing IMF support and improved macroeconomic indicators, the government aims for sustainable and inclusive growth, though challenges like climate risks and global economic slowdowns remain.

Source: Pakistan Economic Survey 2024-25, Pakistan Bureau of Statistics