ISLAMABAD: The Annual Plan for 2025–26 projects a shift in Pakistan’s external balance, with the current account expected to move from a surplus of $1.8 billion in the outgoing fiscal year to a deficit of $2.12 billion. CPI-based inflation is projected at 7.5 per cent for the upcoming fiscal year.
The Annual Plan, approved by the National Economic Council (NEC) under the chairmanship of Prime Minister Shehbaz Sharif and released alongside the federal budget, outlines a broadly optimistic economic outlook. A GDP growth target of 4.2 per cent has been set for FY2025-26, reflecting broad-based improvements across sectors.
The government expects this growth to be underpinned by ongoing macroeconomic stabilisation measures and the implementation of ‘Uraan Pakistan’, with structural reforms, fiscal consolidation, a lower policy rate and improved investor confidence contributing to a more favourable environment.
Exports are targeted at $35.3 billion for FY2025-26, in line with the National Economic Transformation Plan 2024-29. As part of its 5Es Framework, the government is pursuing an export-led growth strategy, promoting key sectors including agriculture, IT, manufacturing, minerals, services, and the blue and creative economies. Nonetheless, textile products continue to dominate the country’s export portfolio.
Workers’ remittances are expected to maintain their growth trajectory, reaching $39.4 billion in FY2025-26. This increase is projected through efforts to promote formal remittance channels, expand into European and emerging labour markets, enhance language and skills training, increase overseas employment, and raise the share of skilled migrants from 44 per cent to 50 per cent through collaboration with TVET institutions and universities. IT exports are also set to sustain double-digit growth, reaching $5 billion, supported by the government’s 5Es strategy.
The agricultural sector is expected to rebound, aided by timely availability of key inputs, resolution of energy supply issues, and productivity enhancements.
Stability in the external sector, improved inflows, and continuation of the IMF programme will be critical to achieving growth targets. Additional contributing factors include political stability, effective governance, a supportive global environment, stable commodity prices and strong foreign demand.
The agriculture sector is targeted to grow by 4.5 per cent in FY2025-26, with major crops expected to expand by 6.7 per cent, rebounding from a contraction in FY2024-25. Minor crops are projected to grow by 3.5 per cent, supported by favourable weather, adoption of climate-resilient practices, and productivity-enhancing PSDP initiatives. Timely provision of quality seeds, fertilisers, and mechanisation is being ensured through policy interventions, with provincial governments reinforcing these efforts. Livestock is targeted to grow by 4.2 per cent, while forestry and fishing are projected to grow by 3.5 per cent and 3.0 per cent, respectively. These initiatives under Uraan Pakistan are expected to bolster food security and help contain inflation.
The industrial sector is projected to grow by 4.3 per cent, including 3.0 per cent growth in mining and quarrying and 4.7 per cent in manufacturing. Large-scale manufacturing (LSM) is expected to grow by 3.5 per cent. A low base from FY2024-25, improved energy availability, lower interest rates, exchange rate stability,
and easing global commodity prices are expected to support recovery. Continued positive momentum is also anticipated in SMEs, utilities, construction, and slaughtering. Structural reforms under the National Economic Transformation Plan and targeted support from the SIFC will further boost industrial output.
The services sector is projected to grow by 4.0 per cent. With the expected rebound in agriculture and industry, particularly manufacturing, demand for wholesale and retail trade, transport, storage, and communications is likely to increase, supporting overall growth. The sector will build on its resilience demonstrated during FY2024-25.
Total investment is expected to increase from 13.8 per cent of GDP in FY2024-25 to 14.7 per cent in FY2025-26, driven by economic recovery, an improved business climate and political stability. Fixed investment is projected to rise from 12 per cent to 13 per cent of GDP, while national savings are targeted at 14.3 per cent of GDP.
The government also aims to leverage opportunities in regional cooperation, digital services, and green economies to strengthen the external sector. Strategic priorities include enhancing export competitiveness, promoting regional integration, diversifying export markets and expanding digital trade.