Pakistan missed its GDP growth target of 3.6% in the outgoing fiscal year, posting a figure of 2.7%, revealed the Economic Survey 2024-25, unveiled by Finance Minister Muhammad Aurangzeb on Monday.
According to the provisional figures provided by the survey, Pakistan’s agriculture sector, industries and services sector registered subdued growth of 0.56%, 4.77% and 2.91%, respectively, during the outgoing fiscal year.
Meanwhile, Large-scale manufacturing (LSM) contracted by 1.5% amid high costs and supply constraints during FY25.
The survey serves as a crucial document ahead of the annual federal budget, offering detailed insights into the country’s socio-economic performance over the outgoing fiscal year.
Commenting on the global economy, Aurangzeb, former head of one of Pakistan’s largest commercial banks, noted that the global GDP growth in 2023 stood at 3.5%, which was reduced to 3.3% in 2024 and is now projected to be 2.8% according to the latest estimates.
“GDP growth in 2023 stood at -0.2%, which grew to 2.5% in FY24. We announce a 2.7% GDP growth for FY25,” said Aurangzeb.
Pakistan’s size of economy has grown from $372 billion in FY24 to $411 billion in the outgoing fiscal, said Aurangzeb.
Talking about a meagre growth in the agri sector, Aurangzeb admitted that if agriculture “had grown at the same rate, our overall growth rate would have been closer to what we have targeted”.
He noted that growth in major crops, which include cotton, maize and wheat, declined by 13.5%.
The finance minister termed it a gradual recovery. “From my perspective, it is the right way to go in terms of sustainable growth,” he said.
The finance czar was of the view that the last thing the government want is “to go into another round of a boom and bust cycle”.
“We plan to stay the course, to ensure that we remain on a sustainable growth trajectory,” he said.
Aurangzeb shared that Pakistan’s CPI inflation reading, which crossed 29% in 2023, has dwindled to 4.6%. “I think we have moved in the right direction.”
“Pakistan’s debt-to-GDP ratio has reduced from 68% to 65%,” he said.
He reiterated that Pakistan needs to fundamentally change its economic DNA, for which structural reforms are vital.
“The tax-to-GDP ratio has hit a five-year high,” Aurangzeb shared.
On energy sector reforms, Auranzgeb said that the resolution of Rs1.27 trillion circular debt inked with banks will play a crucial role going forward.
He added that the privatisation process will go forward in the upcoming financial year with a “renewed vigour and energy”.
Massive savings on debt servicing
On public finance, Aurangzeb shared that debt servicing is “the single largest expense item for the government”.
“Due to a decline in the policy rate, the government has managed to save debt servicing cost of around Rs800 billion to Rs1 trillion,” he said.
Talking about Pakistan’s external sector, Aurangzeb shared that during the outgoing fiscal year (July to April FY25), the country posted a current account surplus of $1.9 billion, compared to $1.3 billion deficit last year.
“We are optimistic that the government will end this fiscal year on a surplus,” he said.
Pakistan’s exports have increased by 7%, with IT exports hitting $3.1 billion, “is a big jump”, he said.
“Whereas, our imports have increased by 11.7% this fiscal, majorly led by the import of machinery (16.5%), transport (26%). The increase in machinery and transport imports is a good omen for the agriculture and industrial sectors.”
Remittances ‘an outstanding story’
Aurangzeb informed that remittance inflows have crossed $31 billion.
“The investments under Roshan Digital Account (RDA) have crossed $10 billion, with 814,000 accounts opened,” he said.
Talking about tax revenue, Aurangzeb informed that the number of individual filers doubled to 3.7 million, whereas the number of high-value filers jumped by 178% during the outgoing fiscal.
The country needs to increase its tax-to-GDP ratio “to a certain level”, he said.
“We have to reach a 14% tax-to-GDP ratio in the medium term to achieve sustainable growth.”
He informed that in the coming fiscal, the government would focus on restructuring and reorganising the debt management office in line with global standards.
The economic survey comes at a time when Pakistan’s economy is stabilising but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund programme.
The finance minister said that Pakistan received the latest tranche from the IMF against many odds.
He informed that the Indian Executive Director left no stone unturned to delay the IMF meeting.
“I am very clear that local investors will pave the way for international investors,” he said, citing recent economic surveys.
Aurangzeb informed that the multilateral partners have given full support to Pakistan “in terms of reform agenda and sustainable growth”.
The government will announce the budget for the financial year 2025-26 on Tuesday.
The earlier dates for the Economic Survey 2024-25 and budget announcement for FY26 were June 1 and June 2, respectively.
However, the government extended the dates to June 9 and June 10.
The National Economic Council (NEC) on Wednesday approved a gross domestic product (GDP) growth rate of 2.7% for the outgoing fiscal year and a projected growth rate of 4.2% for the next financial year.
The NEC was informed that Rs3.483 trillion was being spent on the annual national development, of which Rs1.100 trillion was the share of the federation and Rs2.383 trillion was the share of provinces.
The meeting was told that remittances increased by 30.9% from July 2024 to April 2025, and the current account balance remained positive for the first time.
The fiscal deficit in the fiscal year 2024-25 further decreased to 2.6% of the GDP, while the primary balance remained 3% of the GDP.
