Pakistan Economic Survey 2024–25: wins, warnings and what's next
Growth and Investment
Agriculture sector
The agriculture sector demonstrated resilience in FY2025, recording growth of 0.56%, primarily driven by livestock performance. The sector's share in GDP declined slightly to 23.54% from 24.03% in FY2024.
Important crops declined by 13.49% due to reduced cultivation area and adverse weather conditions, significantly affecting cotton (-30.7%), wheat (-8.9%), sugarcane (-3.9%), maize (-15.4%), and rice (-1.4%). Cotton production was recorded at 7.08 million bales, sugarcane 84.24 million tonnes, wheat 28.98 million tonnes, and rice at 9.72 million tonnes.
Other crops grew by 4.78%, driven by robust performances in potato (11.5%), onion (15.9%), and mash (4.7%). Cotton ginning lost momentum, declining by 19.03% compared to the growth of 47.23% in the previous year.
The livestock sector, contributing 63.60% to agriculture and 14.97% to Pakistan's GDP, grew by 4.72% in FY2025, up from 4.38% the previous year. The forestry sector recorded growth of 3.03%, maintaining a steady contribution of 2.31% to agriculture and 0.54% to GDP. The fisheries sector grew by 1.42%, improving from 0.81% last year, with a sectoral share of 1.31% in agriculture and 0.31% in GDP.
Growth and investment
Real GDP recorded growth of 2.68% in FY2025, underpinned by broad-based stabilization across key macroeconomic indicators. The industrial sector posted 4.77% growth driven by manufacturing recovery, while the services sector expanded 2.91%, maintaining its position as the largest GDP contributor with a 58.40% share.
GDP at current market prices increased to Rs114,692 billion, reflecting a 9.1% increase from the previous year's Rs105,143 billion. The investment-to-GDP ratio reached 13.8% compared to 13.1% in FY2024, while the saving-to-GDP ratio increased to 14.1% from 12.6% last year.
Fiscal Performance
The fiscal deficit narrowed to 6.5% of GDP from 7.4% last year. Revenue collection grew 29% to Rs10.8 trillion, with tax revenue increasing 38%. Current expenditures rose 26% due to higher interest payments.
Monetary situation
Inflation declined sharply to a record low of 0.3% in April 2025, down from 17.3% in April 2024. The average CPI inflation for July-April was 4.7%, marking a significant decrease from 26.0% in the same period last year. The State Bank cut policy rates by 450 basis points to 17.5% since July 2024. Broad money supply grew 13.7%.
External sector
Per capita income reached $1,824, up from $1,662 in the previous year, showing a 9.7% increase supported by improved economic activity and a stable exchange rate. The current account recorded a $1.2 billion surplus (0.3% of GDP), while remittances grew 11% to $32 billion. Foreign reserves reached $14.3 billion, covering 3.6 months of imports.
Health and education
Pakistan's health sector showed modest improvements in FY2024- 25, with infant mortality declining to 52 per 1,000 live births from 56 last year, though national health expenditures remained at just 1.4% of GDP. The education sector saw literacy rates rise to 62.8%, while primary school enrollment reached 28.6 million children, yet education spending stayed at 2.1% of GDP, below regional benchmarks.
Technology and Infrastructure
The IT sector emerged as a bright spot, with exports surging 32% to $3.5 billion and digital banking transactions growing 89% to Rs12.7 trillion, as mobile broadband penetration reached 57% of the population. Transport infrastructure expanded with road networks growing to 284,772 km and aviation passenger traffic jumping 24%, though rural connectivity gaps persist.
Demographics and Labor
Population growth slowed slightly to 2.4%, with urban residents now comprising 40.1% of Pakistan's 241.5 million people, while labor force participation remained stagnant at 37.2%, with significant gender disparities.
"Our digital transformation is accelerating, but human development needs matching investment," Finance Minister Muhammad Aurangzeb told reporters during the survey's launch.
Debt and Capital Markets
Pakistan's public debt stood at Rs67.8 trillion (74.1% of GDP) by March 2025, marking a 2.3 percentage point decline from last year's 76.4% debt-to-GDP ratio. Domestic debt comprised 61% of the total at Rs41.4 trillion, while external debt accounted for Rs26.4 trillion.
The capital market demonstrated robust growth with market capitalization at the Pakistan Stock Exchange surging 50% to Rs10.2 trillion, while the benchmark KSE-100 index gained 78,000 points during FY2025. Corporate bond issuance increased 38% year-on-year to Rs480 billion.
Manufacturing and Mining
Manufacturing output showed mixed results, with the industrial sector posting 4.77% growth driven by a recovery in manufacturing. Small-scale manufacturing and slaughtering helped offset contractions in large-scale manufacturing (LSM). The auto sector rebounded strongly with 42% production growth, while cement output declined 7.2%.
The mining sector grew 2.1%, with coal production increasing 12% to 10.4 million tonnes. However, mineral exports fell 9% to $682 million due to global price fluctuations. Chromite production dropped 18% while rock salt output grew 5%.
The mixed results come ahead of Tuesday's budget announcement, with observers watching for increased allocations to health and education.
The survey noted particular challenges in maternal healthcare and secondary school enrollment, where rates continue to lag behind regional peers despite incremental improvements.
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Business Recorder
6 hours ago
- Business Recorder
Unchanged policy rate disappoints business community
KARACHI: The State Bank of Pakistan (SBP) has decided to maintain the policy rate at 11 percent, disappointing business community who had anticipated a cresting reduction Atif Ikram Sheikh, President FPCCI, apprised that the business, industry and trade community of Pakistan is disappointed with the monetary policy as it continues to be based on a heavy premium vis-à-vis Consumer Price Index (CPI), and the State Bank of Pakistan (SBP) has maintained status quo in the policy rate in its Wednesday meeting. Sheikh highlighted that the CPI, as per government's own statistics, stood at 3.20 percent in June 2025, but the policy rate continues to be 11.0 percent as of today – which reflects a premium of 780 basis points (bps) as compared to inflation and it makes no economic sense. He continued that after deliberations from the apex trade and industry platform with all industries and sectors, FPCCI had demanded a single-stroke rate cut of 500 basis points during the Wednesday's monetary policy committee (MPC) meeting to rationalise the key policy rate and align it to the vision of special investment facilitation council (SIFC) – and, the Prime Minister's vision for industrial development, import substitution and export growth. However, S M Tanveer, Patron-in-Chief, UBG, noted that the CPI is expected to be in the range of 3–4 percent for the months of July–August 2025 as per trade, industry and economists' expectations. Therefore, he had demanded, key policy rate should have been brought down to 6 percent. Separately, Abdul Mohamin Khan, VP FPCCI & Regional Chairman for Sindh Region, proposed that the interest rate should come down to single digit immediately to enable Pakistani exporters to some extent to compete in the regional and international export markets through reducing the cost of capital in a meaningful way. Aman Paracha, VP FPCCI, reiterated the apex body's stance that cost of doing business, ease of doing business and access to finance in Pakistan is at the lowest as compared to all its competitors in the export markets. Asif Sakhi, VP FPCCI elaborated that fortunately the decisive downward trend in inflationary pressures has been continuing for the past many months and the only viable solution to get back on economic growth trajectory is to support industry and exports. Meanwhile, President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Jawed Bilwani expressed disappointment over the SBP decision to maintain the policy interest rate at an elevated 11 percent, contrary to the widespread expectation of a cut that could have brought the rate down to a single digit. He said that at a time when Pakistan's core inflation has significantly receded, there remains no sound economic justification for keeping borrowing costs prohibitively high. 'The State Bank has cited the uptick in inflation during May and June, along with concerns of a moderate rise in the coming months due to persistent pressures on energy prices, as reasons for maintaining the policy rate; yet, this rationale is neither convincing nor economically sound. Bilwani opined that even with inflation at its current level or marginally higher, there remains sufficient room to reduce the interest rate to a single digit, as many regional economies have done in similar or even more complex economic environments. 'By missing this critical opportunity to lower rates, the State Bank has not only dampened hopes for economic revival but also imposed a continued and unnecessary burden on an already strained private sector,' he said, adding that the decision to maintain interest rate was not only detrimental to domestic businesses, particularly SMEs and manufacturers, but also risks further stifling economic recovery, employment generation, and industrial revival. He pointed out that across the region and in comparable economies, monetary policy easing is actively being pursued to support growth. For instance, India's policy rate stands at 6.5 percent, Bangladesh around 8.5 percent, Indonesia at 6.25 percent, while Vietnam has brought its rate down to below 5 percent; all significantly lower than Pakistan's. He said that high interest rates have choked working capital availability, increased default risks, and escalated the cost of doing business, making Pakistani exports uncompetitive globally. 'The business community had hoped for bold, forward-looking monetary easing to complement fiscal consolidation efforts and re-ignite economic activity. The SBP's inaction instead risks prolonging stagflation, undermining job creation, and pushing more enterprises towards closure.' However, President of the Korangi Association of Trade and Industry (KATI), Junaid Naqi expressed deep disappointment over the SBP decision to maintain the policy interest rate at 11%, stating that the move overlooks the demands and pressing concerns of the business community. Naqi remarked that the country's economic indicators clearly justify a significant cut in the policy rate, ideally bringing it down to 6%, a level that industry stakeholders have repeatedly advocated for. 'Retaining such a high interest rate under the current economic climate is not only unjustified but will also continue to burden the already struggling industrial sector,' he said. According to the KATI President, inflation has notably declined and has now entered single digits, while improvements in foreign exchange reserves and a narrowing current account deficit indicate a stable macroeconomic environment all of which support the case for a more business-friendly monetary policy. 'Unfortunately, the Monetary Policy Committee has chosen to ignore these indicators and has kept the rate at one of the highest levels in the region, creating further uncertainty for business.' He warned that the high interest rate is adversely affecting small and medium enterprises (SMEs), limiting exports, discouraging new investments, and threatening job creation at a time when economic stability and growth are urgently needed. He emphasised that the private sector, especially manufacturing and export-driven industries, are under severe financial stress with no relief in sight. He appealed to the government and the State Bank to align the interest rate with the ground realities of the economy, enabling the revival of business activities and long-term economic sustainability. 'The monetary policy must now support growth instead of suppressing it.' Meanwhile, President of SITE Association of Industry Ahmed Azeem Alvi expressed deep concern over the decision to maintain the policy rate at 11 percent. He said that by disregarding the longstanding demand of the business community to bring the interest rate into the single digits, the central bank has dashed their hopes for economic recovery and growth. Alvi questioned the rationale behind not reducing the policy rate despite a visible decline in inflation. He urged the Finance Minister and the Governor of the State Bank to explain the justification for this decision and take the business community into confidence. 'Pakistan is currently receiving encouraging signals from the international community in the wake of its recent success in the Marka-e-Haq. At such a critical juncture, this decision seems ill-timed and presents a potential obstacle to the country's economic progress.' He added that the nation is united, and Pakistan stands on the brink of achieving significant milestones— making this an opportune moment for bold and forward-looking economic decisions. He hoped that the government, along with the Finance Minister and the Governor of the State Bank, would recognise the urgency of the situation, engage with the business sector, and take concrete steps towards restoring economic confidence and accelerating recovery. However, Salim Valimuhammad, Chairman of the Pakistan Chemicals & Dyes Merchants Association (PCDMA) expressed strong disappointment over the decision to maintain the policy interest rate at 11 percent, labelling it a setback for business sentiment and industrial growth. He urged Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, and the Governor of the State Bank to immediately review the policy and reduce the rate to a single digit. He argued that lower interest rates are critical to stimulating economic activity, improving access to affordable loans, and fostering job creation. 'This is not a wise decision in my view, as inflation has already come down, and businesses are under enormous pressure. If such high interest rates continue, it will further burden the business community, which is already struggling.' Copyright Business Recorder, 2025
Express Tribune
6 hours ago
- Express Tribune
Industry dismayed by policy rate status quo
Listen to article The trade and industrial community has strongly reacted to the State Bank of Pakistan's (SBP) decision to leave its policy rate unchanged at 11%, which came in contrary to widespread expectations of a 50-basis-point reduction and calls for a massive cut to around 6%. In the run-up to monetary policy announcement on Wednesday, trade bodies had been releasing statements, calling on the central bank to make a drastic reduction in borrowing cost, which would trigger growth of industries and the overall economy and give a boost to exports and employment. In a statement, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh remarked that the business, industrial and trade community was disappointed with the monetary policy as it continued to be based on a heavy premium vis-a-vis the Consumer Price Index (CPI). He highlighted that the CPI stood at 3.2% in June 2025 but the policy rate remained pegged at 11%, which reflects a premium of 780 basis points as compared to inflation and makes no economic sense. He pointed out that, after deliberations with different industries and sectors, the FPCCI had demanded a single-stroke rate cut of 500 basis points during Wednesday's monetary policy committee meeting. While expressing dismay over the central bank's decision to keep the policy rate unchanged at 11%, the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) highlighted the unfavourable business climate, including high interest rates, ruthless taxation and a high cost of production and utilities. PHMA Central Chairman Muhammad Babar Khan argued that the policy rate status quo would hurt the growth of exporters and manufacturers in varying sectors. "Pakistan's policy rate is higher compared to the region, which makes it extremely challenging for exporters to compete with countries such as Vietnam, Bangladesh and India," he said. Meanwhile, Karachi Chamber of Commerce and Industry President Muhammad Jawed Bilwani, in a statement, said that at a time when Pakistan's core inflation had significantly receded, there was no sound economic justification for keeping borrowing cost prohibitively high. "The State Bank has cited the uptick in inflation during May and June, along with concerns over a moderate rise in the coming months due to persistent pressure on energy prices, as reasons for maintaining the policy rate. Yet, this rationale is neither convincing nor economically sound," he added. Bilwani saw sufficient room to reduce the interest rate to single digits as many regional economies had done in similar or even more complex economic environment. "By missing this critical opportunity to lower the rate, the State Bank has dampened hopes for economic revival," he said.
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