State Bank of Pakistan (SBP) Governor Jameel Ahmad anticipates the economy could grow up to 4.75% this fiscal year, countering a recent downgrade by the International Monetary Fund (IMF).
In written responses to Reuters, Ahmad emphasized that the recovery is broader and more sustainable than what headline export figures might indicate. The SBP raised its FY26 growth forecast to 3.75–4.75% at its January meeting, 0.5 percentage points higher than the previous range, despite a contraction in exports during the first half of the year and a widening trade deficit.
The governor noted that differences in projections are normal and often reflect timing variations, such as the IMF’s inclusion of flood-related assessments in its latest outlook. “All sources and indicators, along with FY26-Q1 data, point to a broad-based recovery across all three sectors of the economy,” he said. He added that agricultural activity has remained resilient despite floods and is even outperforming targets.
Ahmad highlighted that financial conditions have eased significantly following a cumulative 1,150-basis-point cut in the policy rate since June 2024, with the full effects still materializing, supporting growth while maintaining price and economic stability. The central bank last month kept its benchmark rate at 10.5%, defying expectations of a cut.
The divergence with the IMF comes at a critical time for Pakistan, which is emerging from a balance-of-payments crisis under a $7 billion IMF programme.
Exports and remittances:
Ahmad noted that high-frequency indicators and 6% growth in large-scale manufacturing from July to November signal strengthening demand, while agriculture remains resilient despite last year’s floods. He explained that the export decline in the first half of the fiscal year was driven by low global prices and border disruptions, not weaker domestic activity.
The governor expects the current account deficit to remain within 0–1% of GDP, with strong remittances offsetting the trade gap and boosting reserves above programme targets, further supported by inflows from the upcoming Eid festival. He added that if the government opts to raise funds through global debt markets, it would further strengthen the outlook.
As part of diversifying external financing, Pakistan plans to issue panda bonds—yuan-denominated debt in China—around the Lunar New Year. Ahmad also stated that the central bank has been actively purchasing dollars in the interbank market to bolster foreign exchange buffers, with data published regularly.
While economic stability has improved, the governor stressed that structural reforms remain essential to sustain stronger growth and enhance productivity.
