By Asghar Ali Mubarak
Under the leadership of Prime Minister Shehbaz Sharif, Pakistan’s economy in 2025 displayed remarkable signs of recovery, stability, and cautious optimism. After years of turbulence marked by high inflation, currency instability, and persistent fiscal deficits, the country began to regain its footing, signaling a potential turning point in its economic trajectory. While challenges remain, the fiscal year 2025 has demonstrated that a combination of prudent policy-making, structural reforms, and international engagement can yield tangible results.
One of the most striking achievements of the year was the sharp reduction in inflation. From a peak of 38 percent in mid-2023, consumer price inflation fell to an average of around 4.6 percent by the end of the fiscal year. Monthly inflation rates hit multi-decade lows, with a record 0.3 percent in April 2025, and remained around 1.6 percent by November. This decline not only eased the cost-of-living burden for ordinary Pakistanis but also created the conditions for sustainable economic growth.
At the same time, Pakistan’s current account position improved significantly, posting a surplus of approximately $1.8 billion during the July–May period of fiscal year 2025. Foreign exchange reserves also grew substantially, from $4 billion to over $12 billion, bolstering confidence in the country’s external stability. The government’s efforts to reduce the policy interest rate—from 22 percent to around 11–13 percent—further supported industrial growth and private sector investment. The Pakistan Stock Exchange reflected this confidence, reaching record highs, a visible sign of renewed investor trust.
Exports and remittances were key pillars of this economic recovery. Exports saw robust growth, while remittances from overseas Pakistanis surged by nearly 34 percent over five months, providing a critical inflow of foreign currency. Concurrently, revenue collection through the Federal Board of Revenue (FBR) increased sharply, rising 36.7 percent to Rs13,367 billion. The digitization of tax administration, coupled with the removal of corrupt officials, helped broaden the tax base and reduce leakages, transforming previously paper-based processes into efficient, AI-assisted systems.
Pakistan also made strides in diplomatic and trade engagements. Agreements with Gulf states, including Saudi Arabia, the United Arab Emirates, and Qatar, along with strengthened ties with Central Asian countries, enhanced trade routes and economic cooperation. Investments were pledged for critical sectors such as energy, agriculture, and mining, and the government’s proactive handling of fiscal challenges has gradually restored international confidence. The IMF’s Extended Fund Facility, initiated in October 2024, has played a stabilizing role, ensuring adherence to macroeconomic adjustment programs.
Despite these achievements, GDP growth remained modest at 2.7 percent, below initial projections, reflecting structural challenges in agriculture, adverse weather events, and lingering effects of past economic instability. The government, however, has emphasized that fiscal consolidation, targeted reforms, and structural adjustments lay the groundwork for stronger growth in 2026 and beyond. Growth is expected to be driven by private sector investment, stable foreign exchange markets, and continued inflows of remittances, with inflation projected to moderate further to around 5.8 percent.
Central to Pakistan’s long-term economic vision is the ambitious “URAA N Pakistan” plan, launched on January 1, 2025. This five-year National Economic Transformation Plan seeks to address systemic challenges across exports, digitalization, energy, transparency, and sovereignty—the five pillars of its framework. The plan targets a $1 trillion economy by 2035 and a $3 trillion economy by 2047, with specific goals including $60 billion in annual exports, expanded IT and freelancing industries, modernized infrastructure, renewable energy expansion, and climate resilience. URAA N Pakistan is not merely an economic blueprint; it is a roadmap for inclusive development, social uplift, and regional equity.
The plan also prioritizes provincial development, ensuring that Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan are integrated into national growth strategies. Investments in agriculture, industrial production, IT, and tourism, alongside initiatives for infrastructure, rail transport, and energy, aim to create a balanced economy where each province contributes fully to national prosperity. Social objectives, including higher literacy rates, increased female labor force participation, improved healthcare coverage, and youth employment, reinforce the notion that economic growth cannot be divorced from social development.
The Prime Minister has underscored the importance of strong international partnerships, particularly with China through the Belt and Road Initiative, to strengthen trade corridors and regional connectivity. At the same time, efforts to counter corruption, digitize governance, and implement merit-based reforms have sought to ensure that economic gains are transparent, sustainable, and equitably distributed.
In retrospect, Pakistan’s economic journey since 2023 has been remarkable. From a near-default scenario, with inflation at unprecedented highs and policy rates unsustainably elevated, the country has made significant strides in stabilizing its economy, regaining investor confidence, and laying the foundations for long-term growth. While challenges—structural, social, and geopolitical—remain, the fiscal and policy reforms of 2025 demonstrate that concerted leadership, sound planning, and international collaboration can transform uncertainty into opportunity.
(The writer is a senior journalist covering various beats, can be reached at news@metro-morning.com)
