By Our Correspondent
ISLAMABAD — Pakistan is expecting an economic recovery in the current fiscal year, but persistent inflation, uneven industrial performance and dependence on external economic factors remain key challenges, according to the Finance Ministry’s monthly Economic Update and Outlook report released on Thursday.
Read also: Pakistan’s Creative Economy: Billions in promises, ruins on the ground
The report forecasts inflation at 9.5% to 10.5% in October 2026, indicating continued pressure on household budgets, particularly for low-income families.
It warns that future inflation will depend on international energy prices and domestic food supplies, leaving the outlook vulnerable to external price shocks and supply disruptions.
Although agricultural production is expected to improve, the report acknowledges that industrial performance remains uneven, with different sectors recording varying levels of activity. This suggests that the expected recovery may not benefit all sectors of the economy equally.
The report also identifies the need for improvements in tax collection, energy conservation and reforms in state-owned enterprises to support sustainable economic growth.
While machinery imports could strengthen domestic production capacity, their benefits will depend on whether investment translates into higher industrial output and employment.
Higher workers’ remittances and services exports are expected to support foreign exchange reserves and national income. However, the report’s outlook remains partly dependent on these inflows and on developments in international markets.
The government is continuing to focus on increasing tax revenue and controlling expenditure. Although the report describes the budget surplus as a positive development for economic stability, maintaining fiscal discipline while supporting vulnerable and low-income households remains an important challenge.
Improved agricultural production could raise rural incomes and support food-processing businesses, while increased construction activity may stimulate economic activity. However, the report does not suggest that these improvements will automatically translate into broad-based economic gains.
The Finance Ministry has stressed the need to continue support measures for vulnerable groups as Pakistan pursues economic recovery.
