Pakistan’s economy grew by 2.7 percent in the outgoing fiscal year, falling short of the 3.6 percent target, as revealed in the Economic Survey 2024-25 presented on Monday by Finance Minister Muhammad Aurangzeb.
A former top banker and ex-CEO of a major financial institution, Aurangzeb offered a broad overview of the country’s economic performance, highlighting both challenges and improvements.
Setting the global context, the minister noted that the world economy had grown by 3.5 percent in 2023, slowed to 3.3 percent in 2024, and is projected to ease further to 2.8 percent.
He said that, despite facing a contraction of -0.2 percent in 2023, Pakistan managed to bounce back with a 2.5 percent growth rate in FY2024, followed by 2.7 percent this year.
Aurangzeb described this as a “gradual recovery,” and stressed the importance of steady, long-term progress over rapid, unstable booms and busts.
“In my view, this path represents sustainable development,” he said, emphasizing the government’s resolve to avoid the economic ups and downs that have troubled Pakistan in the past.
Among the key policy moves he highlighted was the reduction of the central bank’s policy rate from a record high of 22 percent to 11 percent, an adjustment that, according to the minister, saved Rs800 billion in debt servicing costs.
He noted improvements in the debt-to-GDP ratio, which fell from 68 percent to 65 percent, and an increase in foreign exchange reserves, which reached $9.4 billion by the end of June 2024.
Aurangzeb credited the revival of IMF support under the Stand-by Arrangement to the government’s efforts in restoring economic credibility under Prime Minister Shehbaz Sharif’s leadership.
He confirmed that Pakistan is now seeking a longer-term agreement through the Extended Fund Facility to strengthen economic stability and push forward with structural reforms.
Tax collection has seen significant improvement. The tax-to-GDP ratio hit a five-year high, with revenue growing by 26 percent.
This increase was attributed to technological reforms such as digital invoicing, automated audits, and contactless customs operations.
The number of individual tax filers doubled to 3.7 million, and the segment of high-value filers rose by 178 percent.
The power sector also saw progress. The minister reported better recoveries, steps toward more balanced tariffs, and the appointment of qualified boards in power distribution companies.
The government is actively working to address the massive Rs. 1.275 trillion circular debt and is moving ahead with the privatisation of 24 state-owned enterprises under the supervision of the Prime Minister’s adviser, Mohammad Ali.
Aurangzeb said the country’s debt strategy had shifted from reactive to proactive. Over Rs1 trillion in domestic debt was repaid, and the average maturity of government borrowing was extended by 66 percent to reduce the risk of refinancing.
He urged banks to shift their focus from lending to the government to financing the private sector.
Industrial output recorded a notable improvement, growing by 4.8 percent in FY2025 compared to a 1.4 percent contraction the previous year.
The construction sector expanded by 6.6 percent, and utilities such as electricity, gas, and water also improved.
Small-scale manufacturing saw modest growth, and while large-scale manufacturing continued to decline, sectors like automobiles and textiles began to recover.
The services sector posted a 2.9 percent increase, up from 2.2 percent last year. This was largely driven by a 6.5 percent boost in information and communication services and a 4.1 percent rise in food services. Transport activity also increased, with more movement through ports and airports.
Agriculture, however, remained sluggish, growing only 0.6 percent due to a sharp 13.5 percent drop in major crops. Nonetheless, the livestock sector grew by 4.7 percent, poultry surged by 8.1 percent, and fruits and vegetables rose by 4.8 percent.
Aurangzeb noted that the government is gradually stepping back from direct involvement in crops like rice and maize and suggested that Passco may be dismantled.
He advocated for greater investment in storage facilities and applauded Punjab’s electronic warehouse system.
From July 2024 to April 2025, agricultural lending increased by 16 percent, exceeding Rs2 trillion. The government continues to focus on better mechanisation and improved seed varieties.
The external sector showed significant progress. The current account registered a $1.9 billion surplus over the July–April period, compared to a $1.3 billion deficit the previous year.
Exports grew by 7 percent, led by the IT sector and freelancers who contributed nearly $400 million. Imports also rose by 12 percent, largely due to higher inflows of machinery and transport goods.
Remittances jumped by 31 percent year-on-year, with a record $4.1 billion received in March alone.
Full-year remittances are expected to hit between $37–38 billion, up from $31 billion the previous year. Inflows through the Roshan Digital Account crossed $10 billion, with 814,000 accounts opened to date.
Aurangzeb described FY2025 as a turning point, marked by improved economic indicators, reform-driven momentum, and stronger foreign inflows. The federal budget for FY2025–26 is set to be presented on Tuesday.
The Economic Survey, an annual pre-budget document, outlines key economic trends and provides a basis for national policy discussions leading up to the new fiscal year.
Originally set for early June, both the survey and the budget presentation were delayed before finally taking place on June 6 and June 7.
At a recent meeting of the National Economic Council (NEC), the 2.7 percent growth figure for FY2024-25 was officially endorsed, and a new growth target of 4.2 percent was approved for the upcoming year.
The council also reviewed development spending plans, including a total allocation of Rs3.483 trillion for public sector development, Rs1.1 trillion from the federal government and Rs2.383 trillion from provinces.
Other notable developments included a 30.9 percent increase in remittances over the July–April period and a current account surplus, both pointing to a more stable external economic environment.
On the fiscal side, the budget deficit narrowed to 2.6 percent of GDP, and the primary balance remained in surplus at 3 percent, highlighting better control over public finances as the government works to stabilize the broader economy.