Special Correspondent
- Economy stabilises after near-default in mid-2023
- $7 billion IMF programme anchors recovery, curbs inflation
- SIFC drives Gulf and Chinese investment in mining, energy, and agriculture
- Fiscal surpluses, stronger reserves, and revived investor confidence mark turnaround
ISLAMABAD: Pakistan’s economy has undergone a dramatic transformation over the past three years, shifting from near collapse in mid-2023 to macroeconomic stability and structural consolidation by late 2025, according to an analysis by South Asia Monitor.
Supported by a $7 billion International Monetary Fund (IMF) programme and a suite of domestic reforms, the government succeeded in averting default, easing record inflation, and restoring investor confidence. Economists cited by the publication said the country’s relative stability now holds broader regional significance, as neighbouring South Asian economies face inflationary and debt-related pressures.
In mid-2023, Pakistan faced one of Asia’s deepest crises: inflation soared beyond 30 per cent, foreign exchange reserves plummeted, and public debt absorbed most of the state revenue. Inflation soared nearly 40 per cent in May 2023, placing the economy on the brink of default.
A cornerstone of the rebound, the report noted, was revitalised economic diplomacy under the Special Investment Facilitation Council (SIFC) — a joint civilian-military forum designed to unify policymaking and accelerate foreign direct investment. The SIFC has secured major Gulf and Chinese investment in mining, energy, and agriculture while reducing policy fragmentation and transaction costs.
“The council has become a trusted platform for investor collaboration and policy predictability,” South Asia Monitor observed, adding that Pakistan’s engagement with the GCC, China, and Central Asian economies has begun yielding tangible partnerships.
In June 2024, Pakistan and China agreed to deepen cooperation in mining, oil, and gas, with Beijing encouraging Chinese firms to undertake offshore drilling in Pakistani waters — marking a new phase of the China-Pakistan Economic Corridor (CPEC) from infrastructure to resource and industrial collaboration.
During FY 2025, Pakistan’s stock market mirrored global rallies, posting gains alongside the US, France, and China, as macroeconomic indicators improved. Inflation cooled to multi-year lows, fiscal surpluses emerged, and external inflows strengthened reserves — signalling a rare regional success story amid South Asia’s broader economic headwinds.
In a comparative view, Sri Lanka remains in post-default restructuring, while Bangladesh grapples with export stagnation. Analysts quoted by South Asia Monitor said Pakistan’s discipline under IMF oversight and institutional reform now positions it for sustained recovery, provided reforms continue beyond the current programme cycle.
