Pakistan’s Economic Outlook: Navigating Growth Amidst Global Headwinds (November 2025 Update)
As we approach the end of 2025, Pakistan’s economy demonstrates a resilient, albeit complex, trajectory. This report provides a comprehensive overview of recent economic performance, key indicators, and future projections, drawing from the latest data available through November. We’ll break down the key takeaways, offering insights for businesses, investors, and anyone interested in understanding the evolving economic landscape of Pakistan.
The Big Picture: Steady Progress with Challenges
the Pakistani economy is maintaining positive momentum. This is driven by ongoing structural reforms, a rapid digital transition, and improvements in governance. However, navigating global economic headwinds and internal pressures requires a nuanced understanding of the current situation.
Key Economic Indicators – A Mixed Bag
Here’s a snapshot of where Pakistan stands, broken down into key areas:
* Trade Balance: The current account deficit remains within expected parameters. This is thanks to robust export growth and consistently strong remittance inflows, even with increasing import demand to fuel production. However, merchandise exports increased by only 2% ($10.6bn) in the first four months of FY26, while imports surged by 9.6% ($20.7bn), leading to a $10.1bn trade deficit - a 19% increase year-over-year.
* Fiscal Performance: Fiscal discipline is being maintained through stronger revenue collection and careful expenditure management. Revenue growth stands at 11.4%, but expenditure growth is slightly outpacing it at 11.9%.Despite this,the federal fiscal balance has recorded a surplus of Rs1.338tr, and the primary balance shows a healthy surplus of Rs3.497tr.
* Debt Management: A important achievement is the reduction of public debt by over Rs1.371trillion – the first quarterly decrease in over five years. This was achieved through strategic use of surplus funds to retire costly debt, reducing refinancing risks and bolstering macroeconomic stability.
* Remittances: Remittances continue to be a vital pillar of the economy, increasing by 9.3% to $13bn. Saudi Arabia (24.2% share) and the United Arab Emirates (20.7% share) remain the primary sources.
* Foreign Direct investment (FDI): Regrettably,net FDI inflows have declined by 26% to $747.7m. china ($226.7m) and Hong Kong ($120m) are currently the leading investors.
Sectoral Performance: areas of Strength and Concern
Let’s dive into specific sectors:
* Large-Scale Manufacturing (LSM): The LSM sector is expanding, showing a 4.1% increase during July-September. Positive growth was recorded in 15 sectors, including textiles, apparel, food processing, and automobiles. This is a positive sign for industrial output and job creation.
* Agriculture: The agricultural outlook is mixed. Sugarcane production is projected to increase slightly (0.6% to 84.74 million tonnes) despite the recent floods.However, cotton production is down 3.3% (to 6.85m bales), rice production declined by 3.2% (to 9.41m tonnes), and maize production fell by 6.7% (to 8.43m tonnes). Mung and chilli production, however, saw increases of 14.9% and 0.5% respectively. Agricultural credit disbursement increased by 18.6% to Rs845.3bn,and imports of agricultural machinery rose by 23.5%.
* Services: The services sector is performing well, with exports growing by 15.9% to $3bn. IT exports are notably strong, increasing by 19.6% to $1.4bn. Though, the service trade deficit remains at $1.2bn.
Digital Economy & Technological Advancement
Pakistan’s commitment to a digital transition is yielding positive results. The growth in IT exports is a clear indicator of this. You’ll find that continued investment in digital infrastructure and skills advancement will be crucial for sustained economic growth.
What Does This Mean for You?
