Pakistan's Economy Shows Strength Amid Middle East Risks
State Bank of Pakistan (SBP) Governor Jameel Ahmad announced that Pakistan's key macroeconomic indicators have exceeded expectations for the fiscal year, as reported by the central bank on Saturday.
Though the ongoing Middle East conflict has heightened uncertainties in the macroeconomic landscape, Ahmad assured that Pakistan is better equipped to navigate these challenges compared to past crises.
Ahmad held meetings with senior executives from renowned global financial and investment institutions such as JP Morgan, Barclays, Citibank, Jefferies, and Franklin Templeton, along with major credit rating agencies including Fitch, Moody's, and S&P Global during the IMF-World Bank Spring Meetings from April 13 to 18, 2026. He also had crucial bilateral discussions with the leadership of the IMF and the World Bank Group.
He highlighted Pakistan's significant progress in stabilizing the economy prior to the Middle East conflict outbreak, attributing the success to a sound monetary and fiscal policy mix that lowered and stabilized inflation within the target range while fortifying fiscal and external reserves.
In the first nine months of the current fiscal year, inflation averaged 5.7%, the external current account remained in surplus, and the SBP's foreign exchange reserves surged to $16.4 billion, primarily from SBP purchases in the interbank foreign exchange market.
With ongoing SBP purchases and anticipated official inflows, the SBP's foreign exchange reserves are projected to increase to about $18 billion by June 2026.
Improved macroeconomic stability has bolstered a gradual, sustainable recovery in economic growth, with real GDP rising to 3.8% in the first half of FY26 from 1.8% in the same period last fiscal year.
Ahmad emphasized that Pakistan's current strong position contrasts with past external shocks, like the Russia-Ukraine conflict in early 2022, empowering the economy to face challenges arising from the Middle East developments, including surging global energy prices.
The SBP and the government are committed to maintaining price stability and will implement necessary measures to uphold macroeconomic balance amidst the ongoing conflict.
Ahmad highlighted the prudent monetary policy and positive real policy rate, coupled with the government's primary fiscal surpluses and targeted subsidies to manage the conflict's impact.
Acknowledging the staff-level agreement with the IMF for the third review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF), Ahmad underscored the importance of credit rating reaffirmation as a testament to Pakistan's commitment to macroeconomic stability and reforms.
During his visit, Ahmad engaged with the Pakistani diaspora and global stakeholders at the Remittances and Roshan Digital Account (RDA) roadshow, celebrating RDA inflows exceeding $12.4 billion across over 917,000 accounts. He outlined recent enhancements to the RDA regulatory framework, including the inclusion of non-resident entities, to further integrate Pakistan into global financial markets and attract a wider range of foreign investments.
