Pakistan Economic Survey 2025-26: A Look at Key Takeaways ahead of Budget 2026-27

As Pakistan heads into Budget 2026–27, the latest Economic Survey 2025–26 sets backdrop for what has been challenging year for economy of around 250 million people. Growth came in slightly below target, but key indicators like remittances, manufacturing, and foreign reserves showed resilience amid floods, global uncertainty, and regional tensions. Now, all eyes shift to the budget, where the government will try to balance recovery, reforms, and rising expectations for stronger growth ahead. Pakistan’s economy expanded by 3.7% during FY2025-26, falling short of the government’s 4.2% growth target announced in the previous budget. The Economic Survey described the year as one of gradual stabilisation under the IMF programme despite multiple domestic and international pressures. Finance Minister Muhammad Aurangzeb said floods, global trade uncertainty, and regional tensions negatively affected economic momentum during the fiscal year. According to the survey, Pakistan’s economy reached a record size of PKR 126.9 trillion, equivalent to around $452.1 billion. Per capita income also increased by 9% year-on-year to $1,901, reflecting a gradual recovery in income levels alongside economic growth. The services sector continued to anchor Pakistan’s economy, recording 4.1% growth — the highest in four years. The sector now contributes nearly 58% of the country’s GDP. Industrial output also improved by 3.5%, mainly supported by construction activity and manufacturing recovery. Large-scale manufacturing (LSM) grew by 6.1% during FY26. The government said growth was observed in 16 out of 22 industrial sectors, including textiles, food processing, and wearing apparel. Officials described the improvement as broad-based compared to previous years of industrial slowdown. The agriculture sector expanded by 2.9% even though parts of the country experienced flood-related disruptions during the year. The government highlighted this performance as a sign of resilience in the rural econom