Finance Minister Muhammad Aurangzeb announced on Thursday that Pakistan’s economy showed remarkable resilience amid global trade uncertainties, devastating floods, and geopolitical tensions. The country recorded its highest growth rate in four years, achieving 3.7 percent growth in the fiscal year 2025-26, although this fell short of the government’s initial target.
Discussing the economic performance, Aurangzeb described the growth as indicative of a broad-based recovery spanning multiple sectors. The fiscal year faced significant challenges both externally and domestically. He highlighted the impact of international tariff measures, which affected economies worldwide and led to a reduction in global growth forecasts from 3.3 percent in 2025 to 3.1 percent in 2026.
In addition to these global trade pressures, Pakistan grappled with severe floods and extensive relief efforts that disrupted economic activities. While trade-related uncertainties were anticipated in earlier economic forecasts, the full impact of the floods and other unforeseen events was not fully incorporated.
“These obstacles tested our resilience,” Aurangzeb remarked, emphasizing the government’s commitment to steering the economy from stabilization toward sustainable growth.
Earlier this year, there was a broad consensus among policymakers and analysts that Pakistan’s economy could surpass 4 percent growth in FY2025-26. However, the conflict in the Middle East negatively influenced economic prospects, contributing to the growth rate falling below the target.
Despite these setbacks, Aurangzeb noted steady progress from the challenging conditions inherited in previous years. He urged observers to consider that the economy had contracted by 0.2 percent in 2023 before returning to growth.
Economic growth improved from 2.6 percent in 2024 to 3.2 percent in 2025, eventually reaching 3.7 percent in the outgoing fiscal year, demonstrating a consistent upward trajectory.
The finance minister also pointed out that Pakistan’s economy expanded to its largest nominal size ever during FY2025-26, despite difficult global conditions.
Looking ahead, Aurangzeb expressed optimism about enhancing Pakistan’s competitive position in the United States market by the end of July, despite ongoing uncertainties in international trade policies.
The government remains focused on maintaining macroeconomic stability, sustaining growth momentum, and strengthening resilience against future external shocks.
The recovery was evident across various sectors. Agriculture grew by 1.14 percent, with the livestock sector—which accounts for approximately 60 percent of agricultural GDP—also showing improvement. The manufacturing sector experienced its strongest performance in years, with 16 out of 22 sub-sectors reporting growth. Increased demand for products such as cement, mobile phones, and other industrial goods fueled this expansion.
Furthermore, the services sector, representing 58.1 percent of the economy, continued to support overall growth. The digital economy emerged as a notable highlight, with the information and communication sector expanding by 7.5 percent during the fiscal year.
