Pakistan’s economy has outperformed expectations, recording a 3.07% growth in the second quarter, driven by support from the International Monetary Fund (IMF) and lower interest rates. The Pakistan Bureau of Statistics released this data on Monday, revealing that this growth surpassed the 2.7% forecast from a Bloomberg economist survey and improved from the revised growth rate of 2.36% in the January-March period. The overall growth rate for the fiscal year that ended in June was also adjusted upward to 2.52% from an earlier estimate of 2.38%.
After facing a series of political and economic crises that nearly pushed the nation to default last year, Pakistan has begun to stabilize with financial assistance from multilateral lenders and friendly countries. Foreign exchange reserves have improved from critically low levels, and previously imposed import and currency restrictions have been lifted, positively impacting industrial activity. Inflation has decreased, allowing the monetary authority to reduce borrowing costs by 450 basis points since June.
Last week, the government secured IMF approval for a new $7 billion loan program, providing financial certainty for the coming years. However, Pakistan is still faced with approximately $26 billion in loan repayments for the fiscal year that commenced in July.
In terms of sector performance, the agriculture sector saw a significant increase of 6.76% during the quarter, largely due to a bumper wheat crop, while the services sector grew by 3.69%. Prime Minister Shehbaz Sharif’s administration has committed to achieving sustainable economic growth through structural reforms and projects a growth rate of 3.6% for the year ending June 2025.