The devastating floods of 2025 caused a temporary spike in inflation, pushing the rate to 6.2% in October, yet Pakistan’s economy is demonstrating notable resilience and continues on a path of recovery, according to Federal Minister for Planning, Development and Special Initiatives, Ahsan Iqbal.
Speaking on Friday at the launch of the Monthly Development Update, the minister detailed how flood-related disruptions interrupted a declining trend in the cost of living. Inflation, which stood at 4.1% in July and 3.0% in August, surged to 5.6% in September before its recent peak. Despite this, the average rate for the first four months of the fiscal year was 4.7%, a significant improvement over the 8.7% recorded during the same period last year.
Minister Iqbal attributed the nation’s ability to weather the crisis to timely government actions, including evacuations led by the NDMA and coordinated relief efforts. He stated these interventions were crucial for ensuring continuity in vital sectors, safeguarding livelihoods, and fostering a sustainable economic rebound.
Positive indicators were also noted in the industrial sector, where large-scale manufacturing has entered a recovery phase after two years of contraction. This revival has stimulated demand for raw materials and fuel. Fiscal health also showed strength, with the Federal Board of Revenue documenting Rs. 3.8 trillion in tax collections from July to October, an 11.4% increase from the previous year.
On the external front, the nation’s trade balance presented a mixed but hopeful picture. While goods exports experienced a temporary 4% decline due to flood-related logistical challenges, services exports expanded by 14.7% to reach $2.2 billion. The information technology sector was a particularly bright spot, with its exports growing by 20.5% to $1.1 billion. A 15.1% rise in imports, totaling $23 billion, was seen as a reflection of renewed industrial activity. Meanwhile, remittances from overseas Pakistanis climbed to $13 billion, marking a 9.3% upturn.
The government’s commitment to public sector advancement remains steadfast, with Rs. 330.4 billion approved and Rs. 134.2 billion released for projects under the Rs. 1 trillion development program in the first four months of fiscal year 2026. These initiatives are projected to create over 56,000 direct and 39,000 indirect employment opportunities. Furthermore, cost rationalization measures have yielded savings of Rs. 2.2 billion, while rigorous monitoring has enhanced transparency.
Looking toward the future, the minister highlighted the China-Pakistan Economic Corridor (CPEC) as a key driver of long-term growth, with Phase-II investments poised to open new avenues for prosperity. To build a skilled workforce, he proposed an ambitious plan for 10,000 PhD scholarships in artificial intelligence, engineering, and other emerging sciences at top Chinese universities over the next decade.
In his concluding remarks, Minister Iqbal reaffirmed the administration’s dedication to economic recovery, infrastructure enhancement, and human capital investment to secure a prosperous and resilient future for all citizens.