Key points
- Pakistan’s GDP grew by 2.7pc in FY25
- Inflation dropped sharply to 4.7pc
- Foreign exchange reserves rose to $16.6 billion
- Remittances surged by 31pc to $31.2 billion
ISLAMABAD: Pakistan’s economy is showing positive signs of recovery, according to the latest Economic Brief 2025 released by KPMG Taseer Hadi & Co. The report highlights improvements in key economic indicators, signaling a gradual rebound after recent years of economic challenges.
According to the report, Pakistan’s real GDP grew by 2.7 per cent in the fiscal year 2025 (FY25), slightly higher than the 2.5 per cent growth recorded last year. A major highlight of the report is the sharp decline in inflation, which dropped to 4.7 per cent in the first 10 months of FY25, compared to a staggering 26 per cent during the same period last year.
The State Bank of Pakistan reduced the policy interest rate to 11 per cent, down from a peak of 22 per cent in the previous fiscal year.
Foreign exchange reserves
Pakistan’s foreign exchange reserves also rose to $16.6 billion, up from $14.3 billion a year earlier. Additionally, the country’s current account recorded a surplus of $1.9 billion during the first 10 months of FY25. This is a significant improvement from the $1.3 billion deficit recorded in the same period last year.
The local currency remained more stable as well, with the Pakistani Rupee averaging 278.5 against the US Dollar during the first nine months of FY25, compared to 284.4 during the same period last year.
Remittances from overseas Pakistanis
Remittances from overseas Pakistanis saw a major jump, rising by 31 per cent to reach $31.2 billion, up from $23.9 billion the previous year. This strong inflow of remittances has been a key support for the country’s economy.
Despite the overall positive trends, Pakistan’s trade deficit widened to $21.3 billion in the first 10 months of FY25, up from $18 billion last year. This increase was driven by faster growth in imports 11.8 per cent compared to exports 6.8 per cent.
Per capital income
On the fiscal side, the budget deficit shrank to 2.6 per cent of GDP in the first nine months of FY25, an improvement from 3.7 per cent in the same period a year ago. Furthermore, the report noted an increase in per capita income, which rose to $1,824 in FY25 from $1,662 the previous year.
Overall, the KPMG Economic Brief 2025 suggests that Pakistan is making gradual progress toward economic stability, backed by lower inflation, rising foreign reserves, higher remittances, and a reduced fiscal deficit.
