KARACHI, October 17, 2025: The State Bank of Pakistan has projected the country’s GDP growth to hover around 3.25 percent in FY26, falling at the lower end of its earlier estimate, according to the central bank’s Annual Report on the State of Pakistan’s Economy 2024-25, released Thursday.
While FY25 saw a modest recovery, with GDP growth revised to 3.02pc from 2.68pc, the SBP warned of persistent macroeconomic vulnerabilities. Industrial activity saw a late surge in Q4 FY25, recording a 19.9pc rise, driven by gains in electricity, gas, water supply, and construction. However, mining and quarrying continued to contract for the fourth straight year.
#SBP has released the Annual Report on the State of Pakistan’s Economy for 2024-25.
See PR: https://t.co/GqVUMswGMI
Read Report: https://t.co/AWfDtM4ap5 pic.twitter.com/PxJmRzl5jz— SBP (@StateBank_Pak) October 16, 2025
Despite this rebound, the central bank flagged rising inflation risks, warning that headline inflation could exceed 7pc in the second half of FY26 — breaching the medium-term target range of 5–7pc, due to potential agricultural shortages, external shocks, and geopolitical uncertainties.
The State Bank of Pakistan also outlined structural issues affecting growth, including a weak credit-to-GDP ratio, crowding out of private credit by high government borrowing, and sluggish private sector investment.
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On the external front, the current account deficit (CAD) is projected to remain between 0–1pc of GDP, with some support from lower US tariffs on exports and sustained remittance inflows.
The fiscal deficit is expected to narrow to 3.8–4.8pc of GDP, aided by continued tax reforms, economic documentation, and the transfer of State Bank of Pakistan profits in August 2025.
Meanwhile, SBP’s foreign exchange reserves rose by $21 million, reaching $14.44 billion, while total national reserves stood at $19.81 billion as of October 10.
