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Karachi: Pakistan’s economy is showing signs of recovery, but business leaders, including Mian Zahid Hussain, stress the need for a shift toward export-led growth. Hussain, who holds multiple leadership roles in business forums, reviewed the economic performance of the first five months of the fiscal year 2025-26 and highlighted the challenges ahead.
Inflationary pressures have eased, with inflation dropping to 6.1% in November. This trend enabled the State Bank to cut interest rates by 50 basis points to 10.5% in December. Hussain emphasized the necessity of further reducing borrowing costs to support industrial revitalization, particularly for the SME sector.
The country’s external account has seen a turnaround, with a current account surplus of $100 million in November, thanks to strong worker remittances totaling $16.1 billion from July to November. However, Foreign Direct Investment (FDI) has decreased by 25% to $927 million during the same period. Hussain warns against relying solely on remittances as a strategy and advocates for structural reforms and privatization to enhance export competitiveness.
The Pakistan Stock Exchange has performed exceptionally well, with the KSE-100 index surpassing 172,000 by mid-December. This growth is attributed to investor confidence following the successful completion of the IMF’s review and subsequent $1.1 billion disbursement.
On the fiscal front, the Federal Board of Revenue’s tax collection grew by 12% to Rs. 3.8 trillion during July to October, although it fell short of targets. Hussain calls for broadening the tax net to alleviate the burden on existing taxpayers.
The World Bank and IMF project GDP growth for the fiscal year 2026 at 3.6%, but flood-related damage to agriculture in Punjab poses risks to food security and raw material supply. Hussain urges the government to transition from stabilization to growth by addressing energy prices and focusing on sustainability to combat climate change.