KARACHI (Reuters) – The State Bank of Pakistan (SBP) Governor expects the country’s economy to grow as much as 4.75pc in the current fiscal year, signaling a broader recovery than the International Monetary Fund (IMF) forecast.
In written comments to Reuters, the governor emphasized that the economic rebound is more widespread and durable than export figures alone suggest.
The SBP raised its FY26 growth projection to 3.75–4.75%, up 0.5 percentage points from its previous range, despite a contraction in exports during the first half of the year and a widening trade deficit.
He said differences in projections are common, often reflecting timing issues, including the IMF’s consideration of flood-related impacts in its latest assessment. “All indicators, along with Q1 FY26 data, point to a broad-based recovery across all three sectors of the economy,” he added, noting that agriculture has remained resilient and even exceeded targets despite last year’s floods.
The governor highlighted that financial conditions have eased significantly after a cumulative 1,150-basis-point reduction in the policy rate since June 2024.
The SBP last month held the benchmark rate at 10.5%, despite expectations of a cut. This accommodative policy is supporting growth while maintaining price and economic stability.
He also stressed that although exports declined, the fall reflected lower global prices and border disruptions rather than weak domestic activity. Large-scale manufacturing grew 6% from July to November, indicating strengthening domestic demand, while remittances continue to cushion the current account and keep the deficit within 0–1% of GDP.
Looking ahead, the governor said Pakistan’s plan to issue panda bonds in China could further support reserves and external financing.
He reiterated that while economic stability has improved, structural reforms remain essential for sustaining growth, boosting productivity, and enhancing resilience against external shocks.