ISLAMABAD – Pakistan’s economy is showing positive momentum, with key indicators pointing towards a sustainable recovery and long-term growth. The latest economic data, updated as of November 8, 2024, highlights improvements across various sectors, reflecting the impact of structural reforms and policy initiatives.
GDP Growth
The International Monetary Fund (IMF) has predicted Pakistan’s GDP growth to reach 3.2% for FY 2025, with an even stronger projection of 4% for FY 2026. Bloomberg, in its report, has attributed this growth to an economic turnaround driven by effective reforms that have placed the country on a path to long-term sustainability.
Investment-to-GDP Ratio
The investment-to-GDP ratio is expected to rise from 13% in 2024 to 16% by 2029, validating the government’s policy measures aimed at boosting economic confidence and attracting investment.
Foreign Direct Investment (FDI)
FDI surged by 55.5%, signaling increased investor confidence. This rise reflects the success of recent economic policies and has contributed to an overall improvement in the country’s economic standing.
Exports and Trade
Pakistan’s exports saw a 7.2% increase in the first quarter of FY 2025, with total exports rising from $27.72 billion in FY 2023 to $30.64 billion in FY 2024—a commendable 10.54% growth. The increase is attributed to growing international demand and strategic trade agreements that aim to reduce the trade deficit while supporting local industries.
Inflation and Policy Rate
Inflation has sharply declined, with the IMF forecasting it to be 9.5% for the current year, down from 38% in September 2023 to 6.9% in September 2024. The State Bank of Pakistan also reduced the policy rate from 22% in September 2023 to 15% in November 2024, reflecting improved economic conditions.
Remittances and Foreign Exchange Reserves
Remittances grew by 10.7%, from $27.3 billion in FY 2023 to $30.3 billion in FY 2024, contributing to an increase in foreign exchange reserves, which reached $11.175 billion, the highest level in 31 months. Total reserves now stand at $16.049 billion, reflecting the country’s economic resilience and improved fiscal management.
Government Debt and Tax Revenue
Government debt decreased from Rs1,426 billion to Rs601 billion, thanks to effective austerity measures. Tax revenue also saw a significant surge, with non-tax revenue increasing by 550% to Rs3.05 trillion, while tax revenue rose by 25% to Rs2.77 trillion. The Federal Board of Revenue (FBR) exceeded its collection target, bringing in Rs9.285 trillion for FY 2023, a 30% increase compared to the previous year.
Stock Market Milestone
The Pakistan Stock Exchange (PSX) achieved a record-breaking milestone, with the PSX-100 index crossing the 93,000-point mark. This represents a 77.9% increase and reflects growing investor confidence. Bloomberg has recognized PSX as one of the top-performing markets globally in 2024.
IT and Energy Sector Investments
Major developments are underway in Pakistan’s IT and energy sectors. An IT park is being planned in Islamabad, with a contribution of $88 million from the Public Sector Development Program (PSDP) and $76 million from the Korean EXIM Bank. The park is expected to become a regional tech hub, attracting international business collaborations. Additionally, the Asian Infrastructure Investment Bank (AIIB) has reaffirmed its commitment to invest in Pakistan’s energy transmission sector, signaling further growth potential.
Shrinking Current Account Deficit
The cumulative current account deficit has shrunk to $98 million in the first quarter of FY 2025, while reserves with the State Bank of Pakistan increased by $18 million, reaching $11.175 billion, reflecting financial stability.
Surge in Remittances and Economic Confidence
Remittances rose by 35% in the first four months of FY 2025, amounting to $11.8 billion. This increase is expected to ease pressure on the current account and contribute to currency stability, further boosting investor confidence in Pakistan’s economy.
Overall, Pakistan’s economic outlook remains positive, with steady improvements across various sectors and a promising trajectory towards sustainable growth.
