ISLAMABAD: Pakistan’s economy expanded 3.7 percent and reached a record size of $452.1 billion in the outgoing fiscal year 2025-26, according to the Economic Survey released on Thursday, as the government highlighted gains in manufacturing, inflation and external-sector indicators ahead of the federal budget.
The Economic Survey is an annual government document that reviews the performance of key sectors in the outgoing fiscal year and is traditionally released a day before the federal budget. Pakistan’s federal budget for FY2026-27 is due to be presented on June 12.
The survey showed Pakistan’s GDP growth increased to 3.7 percent in FY26 from 3.2 percent in FY25 and 2.6 percent in FY24, while the size of the economy expanded to Rs126.9 trillion, equivalent to $452.1 billion, the largest recorded economic size in the country’s history. Per capita income rose to $1,901 from $1,751 a year earlier.
The survey attributed the improvement to stronger manufacturing activity, easing inflation and a more stable external position despite regional tensions, volatile energy prices and global economic uncertainty.
“If I were sitting with you in January or February, we had a very strong view that this year’s growth will exceed 4 percent. But as you all know, we were affected by the conflict in the Middle East,” Finance Minister Muhammad Aurangzeb told reporters while unveiling the survey in Islamabad, referring to the ongoing US-Israel-Iran war.
“Having said that, we have reached the biggest economic volume in the history of the country, which has reached Rs126.9 trillion or $452.1 billion.”
One of the strongest contributors to growth was large-scale manufacturing, which expanded 6.1 percent during FY26, its highest growth rate in four years. According to the survey, 16 of 22 manufacturing sectors recorded positive growth, including food, textiles, automobiles, petroleum products and electrical equipment.
Average consumer inflation stood at 6.7 percent during the July-May period, compared with 4.5 percent in FY25 and 23.4 percent in FY24, according to the survey, which said price stability was largely maintained despite the impact of regional conflict on energy prices.
Pakistan’s external accounts also showed improvement. The current account deficit stood at $252 million during July-April, while foreign exchange reserves rose to $17.2 billion by May 29, up 49 percent from a year earlier.
Workers’ remittances reached $33.9 billion during July-May, up 9 percent year-on-year, while monthly inflows hit a record $4.3 billion in April, according to the survey.
The fiscal deficit narrowed to 0.7 percent of GDP during July-March, down from 2.6 percent a year earlier, while the primary surplus reached 3.2 percent of GDP. The survey described the figures as among Pakistan’s strongest fiscal outcomes in decades.
The country’s trade deficit stood at $23.53 billion during July-March.
Sector-wise, agriculture grew 2.89 percent during FY26, industry expanded 3.51 percent and services grew 4.09 percent.
Despite the improvement in key economic indicators, the survey pointed to continuing structural challenges. Investment remained at 14.4 percent of GDP while national savings stood at 14.1 percent, levels economists say remain insufficient to support significantly faster long-term growth.
The survey was released as Pakistan prepares to unveil its federal budget for FY2026-27, with policymakers seeking to sustain economic recovery while maintaining fiscal discipline under the country’s $7 billion International Monetary Fund program.
