KARACHI, Feb 09 (APP): The State Bank of Pakistan (SBP), highlighting improvements in macroeconomic conditions, the outlook and economic prospects on Monday, stated that real GDP growth for FY26 was projected in the range of 3.75 – 4.75 percent and it is expected to increase further in the coming fiscal year.
The central bank, in its bi-annual Monetary Policy Report (MPR) released here, also cautioned of evolving risks to the macroeconomic outlook like persistent global tariff-related uncertainty, volatile global commodity prices and climatic concerns, and stressed on expediting structural reform process to increase the economy’s resilience against the adverse shocks.
SBP, as part of continuing efforts to improve its communications with external stakeholders and to bring more transparency to monetary policy decision-making, started releasing bi-annual Monetary Policy Report (MPR) that reviews macroeconomic developments and outlook that guided the Monetary Policy Committee’s (MPC) decisions since the publication of the August 2025 MPR, said a statement issued.
The report noted improvements in macroeconomic conditions and the outlook, supported by a prudent monetary policy stance and continued fiscal consolidation. The MPR projected that inflation will remain within the 5 – 7 percent target range during most of FY26 and FY27, despite some near-term volatility. The current account deficit is projected to remain contained at 0 – 1 percent of GDP in FY26, with a higher trade deficit partly expected to be offset by robust workers’ remittances and planned official inflows.
“As a result, SBP’s FX reserves are expected to rise to $18 billion by June 2026 and increase further in FY27, reaching close to 3-months of import cover,” the central bank reiterated, adding that economic activity has strengthened, amidst ongoing macroeconomic stabilization, ease in financial conditions, and the recent reduction in the Cash Reserve Requirement to 5%.
Accordingly, economic growth prospects have improved, and real GDP growth is now projected in the range of 3.75 – 4.75 percent for FY26, and growth is expected to increase further in FY27.
While risk of widespread impact from the recent floods have receded, the MPR underscored, uncertainty from global tariff-related developments persists, alongside volatility in global commodity prices.
“Domestically, challenges from below-target revenue collection and impact of potential adverse climate events remain sources of vulnerability for the outlooks of inflation, external account and GDP growth,” the MPR assessed and urged on speeding up the progress on structural reforms to increase the economy’s resilience to adverse shocks, and to improve productivity and plug losses of state-owned enterprises.