Pakistan’s economy has entered Fiscal Year 2025-26 with stability and progress, according to the Finance Ministry’s latest Monthly Update and Outlook report for August 2025. The ministry highlighted that the economy is building on gains made in FY2025, offering a hopeful outlook for the months ahead.
The report pointed to improved external and fiscal fundamentals as key drivers of confidence. Government reforms aimed at encouraging private sector-led growth, easing inflation, and a balanced monetary policy have helped strengthen the foundation for recovery. These measures are expected to boost investment and sustain business confidence.
Global conditions are also working in Pakistan’s favor. Rising demand from international trade partners and a recent trade agreement with the United States are projected to lift exports. Remittances are providing additional support, helping to cushion the trade deficit created by higher imports due to tariff adjustments.
Inflation remains under control despite pressures. The Consumer Price Index (CPI) showed a year-on-year inflation rate of 4.1 percent in July 2025. This is a sharp drop from 11.1 percent recorded in July 2024, though higher than the 3.2 percent seen in June 2025. On a month-to-month basis, inflation increased by 2.9 percent.
The ministry noted that inflationary expectations remain anchored due to administrative measures, policy reforms, and sound economic management. It expects inflation to stay within the 4.0 to 5.0 percent range in August 2025.
However, risks remain. Flood-related damages could strain public finances and disrupt food supply chains in affected areas. Such challenges may limit some of the progress made in recent months.
Despite these concerns, the overall picture remains positive. The combination of fiscal discipline, external sector improvements, and rising investor confidence points to continued Pakistan FY25-26 economic momentum.
For more latest updates, check details on how Pakistan projects August inflation at 4-5%.
