Pakistan’s macroeconomic conditions are stabilizing with a moderate recovery in growth and improved external buffers. However, the outlook remains fragile due to inflationary pressures and global uncertainties.
The State Bank of Pakistan has raised its policy rate to 11.50% to curb inflation and address rising global uncertainty linked to the prolonged Middle East conflict. This move aims to stabilize prices and anchor expectations, but credit flows remain misaligned with sectoral growth dynamics.
Macroeconomic indicators are broadly stable, with GDP growth at 3.8% in H1 FY26, a current account surplus during July-March FY26, and foreign exchange reserves rising to $15.8 billion. Despite this stability, structural weaknesses in credit allocation could limit medium to long-term growth potential.
Credit growth exceeding output growth is seen as potentially inefficient timing effects rather than immediate inefficiency. However, close monitoring of these trends is necessary for sustainable economic development.
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