ISLAMABAD: Pakistan’s economy expanded to more than $452 billion in the outgoing fiscal year, while growth accelerated to 3.7% — the highest in four years — driven by improvements in manufacturing, services, remittances and fiscal indicators, according to the Pakistan Economic Survey unveiled on Thursday.
Presenting the survey ahead of the federal budget, Finance Minister Muhammad Aurangzeb said the economy had demonstrated resilience despite climate-related disruptions, geopolitical tensions in the Middle East and continued uncertainty in the global economy.
“We have not only increased the size of the economy but also achieved broad-based recovery,” Aurangzeb said.
The survey showed that per capita income increased by 9% to $1,901, reflecting improvements in economic activity and income levels. The services sector emerged as a key driver of growth, expanding by 4.9%, while large-scale manufacturing (LSM) posted a 6.1% increase — its strongest performance in four years. Sixteen out of 22 industrial sectors recorded positive growth during the year.
Economic activity also translated into stronger demand indicators, with cement consumption rising by 10%, suggesting a pickup in construction and infrastructure-related activity.
One of the strongest contributors to external sector stability remained workers’ remittances, which are projected to exceed $41 billion by the end of the fiscal year. In May alone, Pakistan received remittances worth $4.2 billion, including more than $1 billion from the United Arab Emirates.
Aurangzeb acknowledged the support of friendly countries, particularly the UAE, saying the Gulf state had remained a longstanding partner of Pakistan.
The finance minister highlighted a marked improvement in Pakistan’s external position, stating that foreign exchange reserves had crossed $17 billion and were expected to exceed $18 billion by the end of June. Total reserves stood at $22.6 billion.
The survey further indicated that the agriculture sector grew by 2.89%, supported by a 17% increase in fertiliser sales. Livestock and dairy continued to dominate agricultural output, accounting for around 60% of the sector.
Fiscal indicators also showed signs of improvement. The fiscal deficit narrowed to 0.7% of GDP, while the primary balance remained in surplus. Revenue collection by the Federal Board of Revenue (FBR) increased by 10.1%, reflecting efforts to improve tax administration and expand the tax base.
According to Aurangzeb, the documented tax base has nearly doubled in recent years, increasing from Rs7 trillion to Rs13 trillion. He added that FBR revenues recorded a 46% increase in June 2026, while overall tax collection rose by 40% over the past two years.
Pakistan also posted a current account surplus of $72 million, supported by strong remittance inflows and prudent external sector management. Private sector credit reached $11.57 billion, suggesting improved business confidence and lending activity.
On inflation, the minister said recent price pressures were largely linked to higher international oil prices. He noted that while Pakistan’s oil import bill increased by $1 billion in April, the rise was limited to $500 million in May through effective management.
The survey showed that Pakistan’s installed electricity generation capacity reached 49,651 megawatts, with thermal sources accounting for nearly half of total capacity, followed by hydropower, renewable energy and nuclear power.
Aurangzeb said investor confidence had also strengthened during the year. Around 175,000 new investors entered the stock market, while 11 initial public offerings (IPOs) were completed — the highest number in two decades. Investments under Roshan Digital Accounts reached $12.75 billion.
He added that global firms including Aramco, Alibaba, Turkish Petroleum, Veon and Google had expanded their presence in Pakistan, despite some companies exiting the market.
Looking ahead, Aurangzeb said economic growth was expected to exceed 4% in the next fiscal year, supported by macroeconomic stability, fiscal discipline and ongoing reforms aimed at broadening the tax base and attracting investment.