Pakistan Achieves Fastest Economic Growth in Four Years

Aug 14, 2026

80 min

Aug 14, 2026 04:30

Pakistan posts fastest economic growth in four years as reforms drive recovery

## Economic Expansion

Pakistan's economy grew by 3.7% in the fiscal year 2025-26, reaching a record size of $452.1 billion. This growth marks the strongest performance in four years, driven by fiscal discipline, structural reforms, and increased investor confidence.

## Sector Performance

The services sector, making up nearly 60% of the economy, expanded by 4.09%, with significant contributions from information and communication technology services. Industrial output rose by 3.51%, and large-scale manufacturing saw a 6.1% increase. The agriculture sector also grew by 2.89% despite adverse weather conditions.

## Macroeconomic Stability

Inflation averaged 7.1%, allowing the State Bank of Pakistan to lower the policy interest rate to 11.5%. Public debt decreased to 68.5% of GDP, down from 75% in 2023, due to effective debt management.

## External Accounts

Overseas remittances reached a record $41.6 billion, supporting stable external accounts. The current account deficit was nearly balanced, and foreign exchange reserves increased by 45% to $18.4 billion.

## Technology and Exports

IT and ICT exports hit a record $4.6 billion, growing by 21% from the previous year. Freelancers contributed $1.76 billion in export earnings, reflecting the digital economy's rapid expansion.

## Stock Market and Investments

The KSE-100 Index closed at a record 180,301 points, with investor numbers rising by nearly 50%. Pakistan re-entered international capital markets, issuing a $750 million Eurobond and a $250 million Panda Bond.

## Reforms and Future Targets

The government implemented reforms in tax administration, energy, and digital payments, among others. Pakistan's sovereign credit rating improved, with a target of 4% GDP growth for FY2026-27 and a fiscal deficit reduction to 3.6% of GDP.

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