KARACHI: State Bank of Pakistan stated on Tuesday that Pakistan’s macroeconomic stability strengthened further during the first half of FY26 despite global trade uncertainty, domestic floods, and rising regional tensions.
In its “State of Pakistan’s Economy, Half Year Report FY26,” the central bank warned that the ongoing Middle East conflict poses risks to inflation, trade activity, remittance flows, and supply chains. However, SBP stated that the war is unlikely to significantly impact Pakistan’s overall economic activity during FY26.
The report projected real GDP growth near the lower end of the previously estimated 3.75 to 4.75 percent range. Meanwhile, the current account deficit is expected to remain close to the lower bound of 0 to 1 percent of GDP despite stronger economic activity and higher commodity prices.
Furthermore, SBP noted that rising international oil prices could keep National Consumer Price Index inflation above the medium-term target range of 5 to 7 percent during most of FY27.
The report highlighted that workers’ remittances from Gulf countries may face pressure in the final quarter of FY26 because Gulf states contribute around 55 percent of Pakistan’s total remittance inflows. Nevertheless, the central bank expects remittances to remain strong overall during the fiscal year.
According to SBP, Pakistan’s economic indicators improved considerably in H1-FY26. Inflation moderated to an average of 5.2 percent, nearly two percentage points lower than the same period last year. Meanwhile, prudent monetary and fiscal policies, foreign exchange purchases, structural reforms, and support from the International Monetary Fund strengthened external buffers.
SBP also reported that real GDP expanded by 3.8 percent during H1-FY26, driven mainly by industrial growth, followed by services and agriculture sectors.
The report additionally stressed that Pakistan requires deep structural reforms and climate resilience investments to sustain long-term economic growth.
