Economy stays on recovery path despite global challenges in FY2025-26: Ahsan

ISLAMABAD, Jun 30 (APP): Federal Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal on Tuesday said Pakistan’s economy remained on the path of stability and recovery during fiscal year 2025-26 despite facing multiple internal and external challenges, including floods, global trade tensions and the Middle East crisis.

Addressing a press conference after the launch of the ministry’s monthly development report for June 2026, the minister said the government’s prudent economic policies helped maintain macroeconomic stability, enabling the economy to sustain its growth momentum.

He said the economy grew at 3.7 per cent during the outgoing fiscal year, the highest growth rate in the last four years,  despite significant external pressures. “Pakistan has continued its journey of economic stability and growth owing to effective policy measures,” he added.

Ahsan Iqbal highlighted that key sectors, including agriculture, industry and services, collectively contributed to economic expansion. The agriculture sector recorded growth of 2.9 per cent compared to 1.5 per cent last year, while the services sector grew by 4.1 per cent, driving economic activity. The industrial sector also posted a positive growth of 3.5 per cent.

He said large-scale manufacturing rebounded strongly, registering 6.4 per cent growth during July-April, compared to a contraction of 1.5 percent in the previous year. Out of 22 major industrial groups, 16 recorded positive growth, with the automobile sector showing an exceptional increase of 64.3 per cent.

The minister said remittances surged by 9.2 per cent to reach $38.1 billion during July-May, with May 2026 recording a historic monthly inflow of $4.3 billion.

He added that exports of services grew by 17.4 per cent, reflecting the increasing strength of Pakistan’s IT and services sector.

Despite global inflationary pressures, average inflation remained at 6.7 per cent during July-May.

However, he acknowledged that inflation rose to 11.7 per cent in May due to higher global oil prices, supply chain disruptions and increased freight costs.

He said the government was taking effective measures, including strict price monitoring, to control inflation and provide relief to the public.

Ahsan Iqbal said the government’s coordinated efforts with provinces helped ease supply-side pressures, adding that essential commodity prices were gradually stabilizing. “Providing relief to citizens and controlling inflation remain top priorities,” he added.

He further informed that the Federal Board of Revenue (FBR) collected Rs 11.2 trillion during July-May, showing a 9.7 per cent increase compared to last year, reflecting improved economic activity and better tax enforcement.

Highlighting development initiatives, the minister said a Rs 3.675 trillion national development programme had been approved for fiscal year 2026-27, with Rs 1 trillion allocated for the federal Public Sector Development Programme (PSDP). Priority areas include infrastructure, social sectors, science and technology, and special regions.

He said development spending was being linked with employment generation, adding that approved projects were expected to create around 10,000 direct and over 45,000 indirect jobs.

The minister also highlighted the importance of women’s inclusion in economic development under the “Uraan Pakistan” initiative, stating that empowering women in education, business and financial inclusion was essential for sustainable growth.

Referring to regional development, he said Balochistan was emerging as a hub of connectivity, trade and investment, particularly under the second phase of CPEC, with focus on minerals, renewable energy, agriculture, fisheries and logistics.

Ahsan Iqbal termed rapid population growth as Pakistan’s biggest development challenge and stressed the need for aligning national development strategies with demographic trends.

He also mentioned key infrastructure projects, including the expansion of the Karachi-Hyderabad M-9 motorway to six lanes, the initiation of the M-6 Sukkur-Hyderabad-Karachi motorway, and the upgradation of road networks linking Chaman, Quetta, and Karachi.

He said work on the ML-1 railway project would begin from Rohri, while an alternative route under the Karakoram Highway-II project would be developed due to the impact of the Diamer-Bhasha Dam.

The minister said the government was committed to accelerating export-led growth, enhancing investment and strengthening the external sector.

“After success in other domains, the country now needs to win the ‘economic battle’ to ensure sustainable and inclusive development,” he added.