For the first time in its history, Pakistan’s economy has surpassed the $410 billion mark, setting a new benchmark just ahead of the much-anticipated Federal Budget 2025-26, scheduled to be unveiled on June 10.
According to the National Economic Survey 2024-25, launched today by Finance Minister Muhammad Aurangzeb at 2:30 PM, the country’s economic journey over the past year has been a mixed bag. While certain sectors have run ahead of expectations, others have fallen behind—highlighting the difficulty the government has in maintaining steady growth.
Industrial sector shines, agriculture falters
The industrial sector proved to be a lone success story, recording a 4.8% rate of growth—over its target of 4.4%. Textiles, garments, automobiles, petroleum products, and tobacco made positive contributions. Small-scale industries also excelled with 8.8% growth, higher than the 8.2% target.
Read More: Economic Survey: Pakistan’s GDP grows 2.7% in FY 2024-25
But the agrigrowth sector fell short, rising by only 0.6% compared with the target of 2%. Principal crops fell 13.5%, significantly more than the forecasted 4.5% fall. Cotton production fell 30.7%, maize fell 15.4%, and wheat fell 8.9%. Minor crops, however, performed better, rising 4.8% against a target of 4.3%—underpinned by increases in vegetables, fruits, spices, and fodder.
Services and GDP growth fall short
The services sector expanded by 2.9%, far less than its target of 4.1%, due to poor performance in leading sub-sectors. Conversely, construction performed well with a 6.6% expansion from a 5.5% target, while electricity, gas, and water supply surged 28.9%, more than double the modest target of 2.5%.
Overall, growth in GDP for the fiscal year came in at 2.7%, a disappointment from the target of 3.6%, yet better than last year. This Pakistan economic performance is both good and bad, representing progress as well as ongoing structural problems.
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Inflation controlled, revenue surpasses targets
A standout positive in the survey is inflation, which held steady at only 5%, significantly below the 12% target.
On the fiscal front, indirect tax collection surpassed expectations and reached Rs8,393 billion versus the target of Rs7,799 billion. Overall revenue went up by 36.7% to Rs13,367 billion, while the tax-to-GDP ratio increased from 6% to 8%, reflecting better tax compliance and collection.
Private sector borrowing jumped from Rs294 billion to Rs870 billion, showing improved business confidence and credit appetite.
But per capita income missed the mark, standing at Rs509,174 against the budgetary target of Rs543,968, a shortfall of Rs34,794—underlining persistent income disparity issues.
Budget 2025-26: What to expect
Finance Minister Aurangzeb will table a Rs17,600 billion budget, with the estimated revenue collection of Rs19,400 billion. The tax collection target of the FBR has been enhanced to Rs14,130 billion.
Also Read: Budget 2025-26: Major tax cut likely for construction sector
Though the expenses have skyrocketed, Rs6,200 billion will be used for debt servicing, revealing the burden of domestic and foreign loans. Nevertheless, the government has left the target for budget deficit untouched, indicating a delicate balancing act.
For tackling the increasing cost of living, the government is proposing a 10% raise in salary for federal government employees and a 5% to 7.5% rise in pensions for pensioners.
In terms of sectoral allocations:
- Rs13.58 billion for education
- Rs14.3 billion for health
- Rs16.22 billion for the IT and digital economy, showing emphasis on job creation and youth employment as part of modernization.
Pakistan’s defense budget, on the other hand, is also set to be raised by 18%, probably due to regional tensions and inflationary pressures.
Budget session schedule finalized
The National Assembly’s budget session will kick off on June 10, with the following timeline:
- No sessions on June 11 and 12
- Debates begin June 13 and continue until June 21
- June 22 is a break
- June 23-26 are set aside for voting on demands, grants, and the Finance Bill
- June 27 will be the final day for supplementary grants and wrap-up
Only the Speaker of the National Assembly, Sardar Ayaz Sadiq, can approve changes to this calendar.
