Economy stays stable, growth momentum strengthens in Q3 FY2025-26: Finance Ministry

ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 30th Apr, 2026) The country’s economy maintained stability and recorded a gradual strengthening of growth momentum during the

third quarter of fiscal year 2025-26, the Finance Ministry said on Thursday.

On the domestic front, the manufacturing sector continued its growth impetus while the external sector witnessed

three consecutive monthly current account surpluses driven by strong remittances and rising IT exports, says monthly Economic Updare and Outlook for April 2026.

Inflation inched up but contained within the annual target, it says adding prudent fiscal management enabled continued improvement in the fiscal position, according to a press release.

Timely Eurobond repayment, successful IMF StaffLevel Agreement and Fitch’s B- rating with stable outlook further reinforced external credibility, reflecting continued reform efforts and overall positive direction of the economy.

Although the ongoing middle East conflict is posing new risks and heightened uncertainty regarding macroeconomic outlook amid escalating energy cost, yet Pakistan’s economy appears relatively better positioned than in previous episodes of external stress, to manage these emerging challenges effectively.

Highlighting performance of various sectors of economy, the report says, agriculture sector showed resilience with mixed Rabi yield and ambitious Kharif targets. The Federal Committee on Agriculture (FCA) estimated wheat production at 29.31 million tonnes from 9.38 million hectares in Rabi 2025-26. Production of potato rose by 23.2 percent to 12.17 million tonnes, and gram increased by 52.4 percent to 0.26 million tonnes. While, onion production recorded at 2.7 million tonnes and tomato production at 0.56 million tonnes.

For Kharif 2026, production targets have been fixed for cotton at 9.64 million bales, rice 9.17 million tonnes, maize 9.77 million tonnes and sugarcane 80.3 million tonnes.

Likewise, Large-Scale Manufacturing (LSM) registered a growth of 5.9 percent during July-February FY2026 against the contraction of 1.8 percent last year. The growth is mainly driven by the automobiles, wearing apparel, food and coke & petroleum products with contribution of 1.5 percent, 1.2 percent, 1.0 percent and 0.9 percent, respectively.

The Consumer Price Index (CPI) based inflation is recorded at 7.3 percent on Year-on-year basis in March 2026 compared to 7.0 percent in the previous month and 0.7 percent in March 2025. Rising international oil price are being translated domestically overtime, changing the baseline situation. On average, during July-March, FY2026, it stood at 5.7 percent against 5.3 percent during the same period last year.

On fiscal side, the government’s strategy to optimize revenue collection and improve expenditure management is reflected in the overall fiscal position during July-February FY2026 with a deficit of 0.

1 percent of GDP (Rs. 161.2 billion) compared to 2.2 percent of GDP (Rs. 2,524.5 billion) during the corresponding period last year. Net federal revenue increased by 10.1 percent to reach Rs. 7,463.1 billion.

Meanwhile, the current account in March 2026, recorded a surplus of $1.1 billion, turning the aggregate position during July-March FY2026 to a surplus of $8 million.

Goods & services exports stood at $30.6 billion, compared to $31.0 billion in the last year, with goods exports amounting to $23.3 billion. Services exports were primarily driven by IT services, which increased by 19.8 percent to $3.4 billion.

Goods & services imports were recorded at $56.3 billion compared to $52.0 billion last year, of which goods imports were $46.8 billion. Trade deficit of goods & services recorded at $25.7 billion compared to $21.0 billion a year earlier.

During 1st July – 03rd April, FY2026, money supply (M2) showed growth of 5.6 percent (Rs. 2247.0 billion) compared to the growth of 3.8 percent (Rs. 1,359.8 billion) during the same period of last year.

Within M2, Net Foreign Assets of the banking system increased by Rs. 839.8 billion compared to an increase of Rs. 1,181.2 billion last year. Similarly, Net Domestic Assets of the banking sector increased by Rs. 1,407.2 billion as compared to an increase of Rs. 178.6 billion last year.

On social welfare, the report says, in March 2026, the Bureau of Emigration & Overseas Employment registered 50,506 workers as compared to 58,555 in March, 2025.

Likewise, the Pakistan Poverty Alleviation Fund, in partnership with 24 organizations, disbursed 8,292 interest-free loans worth Rs. 562 million during March 2026. Since 2019, a total of Rs. 124.6 billion have been provided to the borrowers. During Jul-Feb FY2026, Rs. 330.5 billion was spent under the BISP.

The report says, despite prevailing geopolitical uncertainties, key macroeconomic indicators have remained stable, including sustained growth momentum in LSM, particularly reflected in broad-based recovery in the automobiles sector, and rising cement dispatches, pointing to improving domestic demand.

Based on this momentum, economic activity is expected to remain firm. Amid ongoing supply chain constraints, inflation is anticipated to remain within the range of 8.0-9.0 percent for April 2026.

Despite the potential risk posed by Middle East war and consequently global commodity prices rise and supply chain disturbance, the external position is likely to remain stable, underpinned by higher remittance inflows and IT exports.

Overall, the economy appears well-positioned to continue its growth trajectory, supported by strengthening of macroeconomic fundamentals vis-a-vis appropriate and swift policy response to minimize the adverse impacts, the report adds.