Finance Minister Muhammad Aurangzeb on Thursday launched the Pakistan Economic Survey (PES) for FY2025-26.

Addressing a press conference in Islamabad, he said the survey showed resilience and discipline during the previous year.

He said the country began the outgoing fiscal year with uncertainty due to tariff uncertainty.

According to the survey, Pakistan’s economy grew by 3.7 percent in FY2025-26, up from 3.18 percent a year earlier, supported by improvements across agriculture, industry, and services.

The report attributes the recovery to effective macroeconomic management, reforms under the IMF Extended Fund Facility (EFF), exchange rate stability, and resilience shown by key sectors following the devastating floods of 2025.

The country’s GDP at current market prices increased to Rs126.9 trillion (US$452.1 billion), compared with Rs114.0 trillion (US$408.2 billion) last year. Per capita income rose to US$1,901 from US$1,751.

The services sector, contributing 58.4 percent of GDP, expanded by 4.09 percent, while agriculture grew by 2.89 percent and industry by 3.51 percent. Large-Scale Manufacturing (LSM) recorded a strong growth of 6.11 percent.

The survey reports a significant improvement in public finances. The fiscal deficit narrowed to 0.7 percent of GDP during July-March FY2026, down from 2.6 percent during the same period last year. The primary surplus improved to 3.2 percent of GDP.

Total revenue increased by 10.7 percent to Rs14.8 trillion, supported by higher tax and non-tax collections. Meanwhile, total expenditure declined by 4.2 percent, largely due to a 23.2 percent reduction in debt servicing costs.

Inflation averaged 6.2 percent during July-April FY2026, compared with 4.7 percent in the same period last year. However, inflation accelerated from 7.3 percent in March to 10.9 percent in April 2026 following rising global oil prices and supply disruptions linked to the Middle East conflict.

The government noted that inflation remained largely stable during the first three quarters before external shocks emerged.

Agriculture rebounded strongly, posting 2.89 percent growth compared with 1.53 percent last year.

Key crop outputs included:

Manufacturing emerged as a major driver of growth, expanding by 6.6 percent. The Quantum Index of Manufacturing grew 6.5 percent during July-March FY2026, while LSM growth was estimated at 6.1 percent.

Sixteen out of 22 major manufacturing sectors recorded growth, including:

The investment-to-GDP ratio remained stable at 14.38 percent. Gross Fixed Capital Formation rose 10.9 percent to Rs16.07 trillion.

Private investment increased by 12.8 percent, indicating improving business confidence and macroeconomic stability.

National savings stood at 14.13 percent of GDP, limiting reliance on foreign financing.

Pakistan recorded a current account surplus of US$72 million during July-March FY2026.

Workers’ remittances increased by 8.2 percent to US$30.3 billion, providing critical support to the balance of payments.

Key external indicators included:

The government also expanded Shariah-compliant financing and introduced new long-term debt instruments to improve debt sustainability.

Pakistan’s equity market remained among the better-performing markets globally.

The benchmark KSE-100 Index gained 18.4 percent during July-March FY2026, supported by:

The IT and telecom sector continued to be a standout performer.

Highlights included:

The literacy rate increased from 61 percent to 63 percent, while school attendance rose to 67 percent.

Out-of-school children declined significantly from 38 percent in 2023 to 28 percent in 2025.

In health, life expectancy increased to 67.8 years and immunization coverage reached 73 percent.

Despite economic gains, challenges remain.

The national poverty rate increased to 28.9 percent in 2024-25 due to inflation, climate shocks, and economic adjustments.

The unemployment rate rose to 7.1 percent from 6.3 percent, even as total employment increased to 77.2 million people and labour force participation improved.

Pakistan’s installed electricity generation capacity reached 49,651 MW.

Hydel, nuclear, and renewable energy sources now account for 50.8 percent of installed capacity, surpassing thermal power’s share for the first time.

Petroleum consumption increased 3.5 percent, while petroleum imports rose 10.5 percent amid higher economic activity and volatile international prices.

The survey identifies climate change as one of Pakistan’s most serious economic threats.

The 2025 floods caused:

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