- Inflation declined to 7.2% in H1-FY2025 from 28.8% a year earlier.
- Agricultural sector grew by 6.2% in FY2024, buoyed by investment.
- Current account balance posted surplus of $1.21bn in Jul-Dec FY25.
The economy maintained its positive trajectory in the first half of FY2024-25, with GDP expanding by 2.5% after last year’s contraction, building on the stabilisation achieved in FY2024, according to a Finance Division report released on Monday.
The State of Pakistan’s Economy Half Yearly Report (July-December 2025) attributes the sustained positive momentum to sound macroeconomic management, effective inflation control measures, and improved fiscal and external account stability.
“Inflation substantially declined to 7.2% in H1-FY2025 from 28.8% a year earlier, supported by easing global prices, a stable exchange rate, and targeted government policies,” the finance ministry said in the report.
Summing up the economic performance in the first six months of this fiscal year, the report states that the policy reforms, monetary easing, and fiscal consolidation further strengthened the foundation for sustainable economic momentum.
Giving an overview of the sectoral performance, the report said the agricultural sector grew by 6.2% in FY2024, buoyed by increased investment, expanded agricultural credit, and favourable weather conditions.
“High-frequency indicators, including machinery, investment and water availability, suggest a positive outlook for future growth in the sector. The industrial sector exhibited mixed results; like textile sector is improving gradually.”
It said the services sector was projected to continue its positive trajectory, driven by the recovery of domestic activity and growth in trade.
On the external front, the current account balance posted a surplus of $1.21 billion in July-Decemer FY2025.
“Record-high remittance inflows and strong export performance offset the increasing import bill, while the foreign direct investment (FDI) surged 20%, primarily fueled by investments in the power and oil sectors.”
Moreover, the report says the foreign exchange reserves are enough to cover over two months of imports, supported by International Monetary (IMF) disbursements and international financial assistance.
Commenting on the exchange rate situation, it said the rupee appreciated by 1.2% against the dollar, indicative of favourable external developments.
“The government has been able to reduce the fiscal deficit to 0.04% of GDP in Jul-Nov FY2025, a marked improvement from the previous year’s deficit,” the half-yearly report said.
The finance division credited this improvement to robust growth in tax and non-tax revenue, reflecting improved fiscal discipline, reduced interest rates, and a stable exchange rate.
Forecasting future GDP growth, the report stated that with strengthened economic fundamentals, declining inflation, and growing investor confidence, Pakistan is well-positioned for continued growth momentum throughout FY2025.
The report stated that key policy measures, including monetary easing and export facilitation, are creating an environment conducive to private sector-driven growth.
It added that continued fiscal discipline, an improved external account, and favourable global trends are expected to sustain this positive momentum.
“Committed to sustainable growth, the government is focused on overcoming structural challenges and promoting inclusive development and recently, the government has unveiled its homegrown 5-Year Economic Transformation Plan, URAAN Pakistan.”
The plan underscores inclusivity through a pragmatic, inclusive, and self-reliant approach to address Pakistan’s economic challenges, the report added.
