SBP governor sees growth recovery, stronger reserves

KARACHI: Pakistan’s macroeconomic outlook is improving as inflation cools, foreign exchange reserves rise and growth gradually recovers, State Bank of Pakistan Governor Jameel Ahmad said during meetings with senior executives from global financial institutions on the sidelines of the IMF-World Bank Spring Meetings in Washington, DC.

In discussions with executives from JPMorgan, Standard Chartered, Deutsche Bank, Jefferies and major credit rating agencies, Ahmad outlined the country’s progress in stabilising its economy through tight monetary policy and sustained fiscal consolidation.

Headline inflation has declined sharply over the past two years to a multi-decade low of 0.7 per cent in March 2025, Ahmad said. Core inflation has also eased significantly, falling from above 22 per cent to single digits, and is expected to moderate further. Headline inflation is projected to stabilise within the 5-7 per cent target range, he added.

Pakistan’s foreign exchange buffers have strengthened both qualitatively and quantitatively, Ahmad noted. The SBP’s reserves have more than tripled since their low in February 2023, while forward liabilities have fallen sharply. Unlike in previous periods, the recent build-up in reserves has not been driven by external debt accumulation. Public sector external debt, both in absolute terms and as a percentage of GDP, has declined since June 2022, he said.

Ahmad emphasised that the improvement reflects a strategic focus on building resilience to external shocks, including global trade-related uncertainty. The reserves build-up has been achieved through foreign exchange purchases amid a surplus in the current account.

He added that the SBP aims to raise FX reserves to $14 billion by June 2025.

As economic conditions stabilise, Pakistan’s GDP growth is recovering and is expected to reach around 3.0 per cent in FY2025, Ahmad said. He added that international credit rating agencies have acknowledged the improvements in the country’s economic indicators.

Policymakers remain focused on preserving macroeconomic stability and implementing structural reforms across sectors, the SBP governor said. With continued progress on reforms, Pakistan is positioned to achieve sustainable economic growth and broader socioeconomic development, he added.