Good, but not enough

Less than a month on from the passage of a highly contentious budget, this week brought a flurry of good news for the country’s economy. It started off with the IMF resident representative for Pakistan praising the country’s performance under the Extended Fund Facility (EFF) thus far, particularly the successful completion of the first review by the IMF Executive Board in May 2025, and reaffirming the Fund’s support for Pakistan’s economic and climate reform agenda. He also said that Pakistan’s growth was expected to strengthen in 2025 and beyond. Then, central bank data on Friday showed that Pakistan’s current account posted a surplus for the first time in 14 years in the fiscal year that ended in June 2025, helped by record-high remittances of $38.3 billion and a decline in the services deficit. The current account surplus stood at $2.1 billion, or 0.5 per cent of GDP, in FY2024-25 versus the deficit of $2.1 billion, or 0.6 per cent of GDP, in the previous fiscal year. And while remittances might be the key to the surplus, exports have not been sluggish either, rising to $32.295 billion in FY25, up 4.0 per cent from a year earlier. Its exports made up almost 12 per cent of this total at around $3.8 billion, an 18 per cent rise over FY24.

So, with all these indications that there is much to cheer about on the economic front, why do the people not seem so cheery when it comes to their economic prospects? For starters, one should note that, of all the records and increases the outgoing fiscal has seen, growth has not been part of the party. While the Pakistan Economic Survey 2024-25 claims the country recorded GDP growth of almost 2.7 per cent, some experts have called this figure too high. Even if this is not the case, 2.7 per cent growth is simply too low for a country whose population is growing rapidly and where taxes and tariffs only seem to be trending upwards. Where will the incomes and jobs needed to pay for all this come from? This is the question many ordinary people are asking and the rosy figures from this week still fall short of giving a satisfactory answer. While a current account surplus and rising IT exports are important, analysts caution that the former may not improve in the ongoing fiscal year, particularly given the government’s decision to cut subsidies for banks handling remittances. And while the latter is expected to keep growing, it is still too low to have the kind of impact on jobs and growth the country needs. One must also consider the fact that sectors like textile exports are actually struggling now, growing by just 7.39 per cent in FY25. Experts say that this modest increase signals that the sector remains overly reliant on government subsidies and lacks market diversification, even as it remains the country’s primary export backbone.

Even the growth expectations mentioned by the IMF representative come with a potential spoiler, as he also cautioned that elevated trade tensions, geopolitical fragmentation and weakening global cooperation continue to generate exceptional uncertainty and weigh on the global economic outlook. He also highlighted the need for structural reforms for Pakistan’s long-term sustainability. As such, a souring global economic atmosphere could easily alter growth expectations, and Pakistan’s long-term economic stability remains to be secured. However, one cannot deny that the government has indeed stuck to the path of reform and stabilisation and it is important that it stays on it. Several big-ticket items are still waiting to be checked, particularly SOEs reforms with the liabilities of these companies now swelling to a shocking Rs5.9 trillion. This week’s good news is temporary and it should not distract policymakers from the bigger picture or be treated as a signal that it can take its foot off the pedal.