On Thursday June 11, 2024, Federal Finance Minister Muhammad Aurangzeb officially announced and unveiled the Pakistan Economic Survey for the fiscal year 2025-26. The Economic Survey of Pakistan is the Finance Division’s annual flagship report that provides a comprehensive review of the country’s economic performance during the outgoing fiscal year (July through June) and outlines key trends, achievements, challenges, and policy directions for the coming year. Traditionally, it is released just before the federal budget (usually a day before) to give Parliament, policymakers, and the public an official snapshot of the economy before new fiscal decisions are made. While the government is not constitutionally obligated to present the Survey or follow its recommendations, it remains the most important analytical document produced by the Finance Ministry and serves as the principal basis for budget formulation and economic policy planning.
The primary purpose of the Economic Survey is to offer the government’s own authoritative assessment of macroeconomic conditions. It reviews actual data on gross domestic product (GDP) growth, inflation, employment, trade balances, public debt, sectoral performance, energy production, and social indicators. By doing so, the Survey identifies which sectors require greater attention, highlights structural problems such as circular debt in the energy sector or widening trade deficits, and suggests policy reforms and reforms that may be needed in the upcoming fiscal year. In addition, the Survey plays a critical role in enhancing public transparency by informing citizens, businesses, and investors about the state of the economy and major government schemes affecting them. For international creditors and partners, particularly the International Monetary Fund, the Survey’s data and analysis are essential in demonstrating Pakistan’s commitment to fiscal reforms and in strengthening the case for bailout agreements or new financing arrangements.
The Economic Survey and the Annual National Budget are complementary instruments that serve different but interconnected functions in Pakistan’s fiscal governance. The Survey is essentially a retrospective document that reviews what has happened in the past fiscal year, presenting actual performance figures and diagnostic analysis. In contrast, the Budget is a prospective document that sets out the government’s revenue projections, expenditure allocations, tax policies, and fiscal targets for the next fiscal year. The Survey identifies challenges and policy priorities, and the Budget translates these priorities into concrete fiscal numbers specifying how much will be spent on defense, education, health, development projects, and debt servicing, and how much revenue will be collected through taxes and other sources. In simple terms, the Economic Survey tells us “where the economy is,” while the Budget explains “where the government wants to go and how much money it will spend to achieve those goals.”
The Economic Survey relies on a set of key economic indicators that serve as diagnostic tools for understanding the health and trajectory of Pakistan’s economy. These indicators and their interpretations are presented in the following table for clarity and ease of reference in research work.
These indicators enable policymakers, economists, and researchers to diagnose problems such as high inflation, widening trade deficits, or unsustainable debt levels, and to design appropriate reforms such as tax adjustments, export incentives, or energy sector fixes.
The Pakistan Economic Survey 2025-26, unveiled by Finance Minister Muhammad Aurangzeb on Tuesday, June 8, 2025, serves as the official pre-budget document offering detailed insights into the country’s socio-economic performance over the outgoing fiscal year. Released just one day before the federal budget for FY2026, the Survey presents a narrative of economic stabilization and recovery following years of severe macroeconomic challenges, including hyperinflation, balance of payments crises, and stagnant growth. The document, based primarily on provisional figures from July–March/April FY26, reveals that Pakistan’s real GDP grew by 2.68 percent in FY26, marking an improvement from 2.51 percent in FY24 but falling short of the government’s revised target of 3.6 percent.
The 2.68 percent GDP growth in FY25 brought Pakistan’s total GDP to approximately $411 billion, demonstrating modest but meaningful expansion in economic activity. The growth was driven unevenly across the three major sectors of the economy. The services sector, which constitutes 58.4 percent of GDP, expanded by 2.91 percent, reflecting recovery in trade, transport, finance, and telecommunications. The industrial sector demonstrated stronger performance with 4.77 percent growth, particularly in large-scale manufacturing, where wearing apparel segment grew by 7.6 percent driven by export demand and improved global market conditions. The agriculture sector, however, remained subdued with only 0.56 percent growth, constrained by climatic challenges, water scarcity, and limited adoption of modern farming techniques. Per capita income rose significantly by 9.75 percent, or $162, reaching $1,824 in FY25 compared to $1,662 in FY24. This represents a notable improvement in nominal welfare indicators, although economists caution that GDP per capita alone may not fully reflect the actual welfare of average citizens, particularly given persistent inflation and uneven distribution of income gains. The investment-to-GDP ratio improved to 13.8 percent in FY25 from 13.1 percent in FY24, signaling increased confidence in the economy and greater capital formation. Similarly, the national saving rate improved to 14.1 percent of GDP, reflecting stronger domestic resource mobilization and a growing culture of savings among households and businesses.
One of the most remarkable achievements highlighted in the Economic Survey 2025-26 is Pakistan’s fiscal performance, particularly the historic primary budget surplus of 3.0 percent of GDP achieved during July–March FY26. This represents the first fiscal surplus in the first quarter after 24 years, with revenue collection totaling Rs 1.896 trillion. The primary surplus indicates that the government is collecting significantly more revenue than it spends on non-debt current expenditures, a crucial milestone for fiscal sustainability and debt management.
Total revenue collection for July–March FY25 reached Rs 13.37 trillion, representing a 36.7 percent increase compared to the previous year. Tax revenue grew by 25.8 percent to Rs 9.14 trillion, while non-tax revenue surged by 68 percent to Rs 4.23 trillion, reflecting improved efficiency in revenue administration and broader tax base. The Federal Board of Revenue (FBR) collected Rs 10.23 trillion during July–May FY25, a 25.9 percent increase, demonstrating enhanced tax collection mechanisms and perhaps greater compliance. Development spending also received significant attention, with the Federal Public Sector Development Programme (PSDP) increasing by 28.6 percent to Rs 413.6 billion, indicating the government’s commitment to infrastructure development and public investment. Provincial governments also contributed to fiscal stability, collectively achieving a surplus of Rs 1.05 trillion, demonstrating coordinated fiscal management across federal and provincial levels.
The Economic Survey 2025-26 documents one of the most dramatic improvements in Pakistan’s economic performance i.e. the drastic reduction in inflation. Consumer Price Index (CPI) inflation decreased to an average of 4.7 percent during July–April FY2026, down sharply from 26.0 percent in the same period last year. More remarkably, inflation in April 2025 reached a record low of 0.3 percent, compared to 17.3 percent in April 2024, representing a historic declination in price pressures.
This extraordinary inflation reduction was achieved through a combination of tight monetary policy, exchange rate stability, and improved supply conditions. The State Bank of Pakistan reduced the policy rate from 22 percent to 11 percent by May 2025, marking a 11-percentage-point reduction in interest rates as inflationary pressures subsided. The Karachi Interbank Offered Rate (KIBOR) dropped by 9.7 percentage points year-over-year, falling to 11.3 percent, which significantly reduced borrowing costs for businesses and consumers. This monetary policy easing is expected to stimulate private investment and consumption in the coming fiscal year. Currency stability also played a crucial role in inflation control. The average exchange rate stood at Rs 278.75 per dollar during FY26, demonstrating relative stability compared to the volatile depreciation seen in previous years. This exchange rate stability helped anchor inflation expectations and reduced imported inflation pressures.
The external sector demonstrated remarkable strength in FY26, with Pakistan achieving a current account surplus of $1.9 billion during July–April FY2026. This is a significant turnaround from the chronic current account deficits that plagued Pakistan’s economy in previous years, reflecting improved export performance, surge in remittances, and prudent import management. Remittances from overseas Pakistanis reached a historic high of $31.2 billion, up 31 percent compared to the previous year. This surge in remittances is attributed to improved incentives for formal channel transfers, greater confidence among overseas Pakistanis, and possibly increased migration for work. Remittances have become a critical source of foreign exchange, supporting household incomes and strengthening the balance of payments. Exports totaled $27.3 billion while imports reached $48.6 billion during the period, resulting in a trade deficit that was partially offset by the remittance surge and other current account inflows. The export performance reflects recovery in key sectors such as textiles, apparel, and agricultural products, while import levels suggest controlled demand for non-essential goods and continued investment in essential imports. Foreign exchange reserves increased substantially to $16.64 billion, with the State Bank of Pakistan holding $11.5 billion and commercial banks holding $5.14 billion. This buildup in reserves provides a crucial buffer against external shocks, enhances Pakistan’s ability to meet import obligations, and strengthens investor confidence in the economy’s stability. Net Foreign Direct Investment (FDI) slightly declined to $1.78 billion, suggesting that while Pakistan is achieving macroeconomic stabilization, it still needs to attract more long-term foreign investment through improved business environment, policy certainty, and investment-friendly reforms. Despite the modest 2.68 percent growth in FY26, the Economic Survey projects GDP growth at 5.7 percent over the medium term, reflecting confidence in the economy’s recovery trajectory and the effectiveness of ongoing reforms. This medium-term projection assumes continuation of structural reforms, sustained investment in human capital, improved governance, and reduced vulnerability to climate and external shocks.
The Survey emphasizes that long-term economic sustainability depends on continuing structural reforms, investing in human capital, improving governance, and reducing climate and external vulnerabilities. Key reform areas include tax system modernization, energy sector circular debt resolution, export competitiveness enhancement, agricultural productivity improvement, and digitalization of economic processes.
The Economic Survey 2025-26 highlights several notable achievements: inflation, fiscal deficit, and current account deficits have all declined significantly; exports, remittances, revenues, and investment are improving; and investor confidence is strengthening through improved credit ratings and reserve buildup. The historic primary surplus and current account surplus represent structural improvements in fiscal and external management that were not seen in previous years. However, the Survey also acknowledges persistent challenges. The agriculture sector’s subdued growth of 0.56 percent indicates structural vulnerabilities in the farming sector that require attention through modernization, water management, and climate-resilient practices. The slight decline in FDI suggests that Pakistan still needs to improve its business environment and policy certainty to attract long-term foreign investment. The GDP growth of 2.68 percent, while positive, remains below the original target of 3.6 percent, indicating that the recovery is still fragile and requires sustained policy support.
The author, is a freelance writer, columnist, blogger, and motivational speaker. He writes articles on diversified topics. He can be reached at sir.nazir.shaikh@gmail.com