The country\u2019s economy has completed first half of FY2026 with continued macroeconomic stability, reflected in contained inflation, rebound Large Scale Manufacturing growth and strengthened foreign exchange reserves with stable exchange rate, said Finance Ministry in a report released here Tuesday.
\nAccording to Monthly Economic Update and Outlook for December 2025, the sustained growth momentum has been complemented with fiscal discipline resulted in fiscal and primary surpluses adding LSM has gained momentum, signaling improved growth prospects for the remaining period of the fiscal year.
\nRemittances remained robust, supporting the external account. In parallel, the Pakistan Stock Market has maintained a strong rally, ranking among the world\u2019s topperforming markets and reflecting improved investor sentiment.
\nBuilding on these gains, the government has launched Economic Governance Reforms aimed at embedding stability into institutions and enabling sustainable private sector led growth.
\nThe report says, the agriculture sector remained resilient, driven by better input demand, and posted growth of 2.9 percent in first Quarter (Q1) of FY2026, showing a significant improvement from 1.0 percent during the same period last year.
\nThe important crops (excluding Wheat being Rabi crop) recorded a contraction of 0.7 percent as compared to a contraction of 13.1 percent during Q1 last year, mainly due to reduced cotton production (-1.2%).<\/p>\n
Likewise, LSM registered a growth of 6.0 percent with QIM index reaching its highest during July-November FY2026 since FY2016 while during the period, 16 sectors recorded positive growth. In November 2025, LSM grew by 10.4 percent on year-on-year (YoY) basis and by 0.2 percent on month-on-month (MoM) basis.
\nThe Consumer Price Index (CPI) inflation recorded at 5.6 percent on YoY basis in December 2025 as compared to 6.1 percent in the previous month and 4.1 percent in December 2024. On average, inflation during July-December FY2026 stood at 5.2 percent as against 7.2 percent during the same period last year.
\nThe government has achieved a fiscal surplus during July-November FY2026 also owing to a growth in revenue and a considerable reduction in mark-up payments.
\nGross federal revenue receipts recorded a growth of 7.8 percent during the reference period, contributed by growth in both FBR\u2019s taxes and non-tax revenue by 10.2 percent and 4.8 percent, respectively.
\nTotal expenditure declined by 6.2 percent due to 6.4 percent reduction in current expenditure as mark-up payments declined by 21.3 percent. Development expenditure, on the other hand, posted an increase of 1.5 percent.
\nMeanwhile, the current account posted a deficit of $1.2 billion during July-December FY2026, compared to a surplus of $0.96 billion recorded last year. Goods and services export recorded at $20.3 billion compared to $20.4 billion last year in which goods export stood at $15.5 billion.<\/p>\n
Services export were primarily driven by IT services that increased by 19.8 percent to $2.2 billion. Goods and services import recorded at $37.8 billion compared to $33.5 billion last year, including goods imports of $31.3 billion. Trade deficit of goods & services increased to $17.6 billion from $13.1 billion last year.
\nLikewise, remittances were up 10.6 percent to $19.7 billion, led by inflows from Saudi Arabia (23.9% share) and UAE (20.7%). Net FDI inflows declined, recording at $808.1 million.
\nDuring July-December FY2026, money supply (M2) shows a growth of 3.7 percent as compared to a contraction of 0.7 percent during the corresponding period of last year.
\nWithin M2, Net Foreign Assets (NFA) of the banking system increased by Rs. 107.9 billion as compared an increase of Rs. 667.3 billion in last year. Whereas, Net Domestic Assets (NDA) of the banking sector increased by Rs. 1,406.5 billion as compared a decrease of Rs. 934.7 billion last year.
\nUnder the borrowing for budgetary support, the government retired Rs. 347.0 billion as compared to the retirement of Rs. 2,215.4 billion last year.
\nThe report says, Pakistan\u2019s economy is well positioned to sustain its growth momentum in FY2026, supported by the encouraging performance of LSM and other high-frequency indicators.
\n\u201cThis positive trajectory reflects the impact of prudent policies, ongoing structural reforms, and easing of monetary conditions due to subsiding inflationary pressures,\u201d it adds. According to the report, inflation is expected to remain within the range of 5.0-6.0 percent in January.
\nOn the external front, the current account is projected to remain in a deficit; however, robust remittance inflows and steady performance in IT and services exports are likely to cushion external pressures.
\nThe improved fiscal management is also expected to continue supporting the macroeconomic stability, it adds.<\/p>\n","protected":false},"excerpt":{"rendered":"
The country\u2019s economy has completed first half of FY2026 with continued macroeconomic stability, reflected in contained inflation, rebound Large Scale Manufacturing growth and strengthened foreign exchange reserves with stable exchange rate, said Finance Ministry in a report released here Tuesday. According to Monthly Economic Update and Outlook for December 2025, the sustained growth momentum has […]<\/p>\n","protected":false},"author":2,"featured_media":527974,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-527963","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n