The Ministry of Finance has said that Pakistan’s recent trade deal with the United States is expected to boost exports.
According to the Monthly Economic Update and Outlook released on Thursday, Pakistan’s economy entered FY2026 with stable macroeconomic conditions and improved growth prospects, supported by a stronger external and fiscal position.
On a year-on-year basis, Large-Scale Manufacturing (LSM) has been on a steady recovery since April 2025, peaking in June, and is expected to gain further momentum with improvements in automotive and fertilizer output.
Government measures to facilitate investment, reforms supporting private sector-led growth, easing inflation, and accommodative monetary policy are also likely to reinforce business confidence, said the report.
The report noted that a favorable global environment, stronger demand from trading partners, and the trade deal with the U.S. are expected to support exports. Meanwhile, workers’ remittances will help contain trade deficit pressures arising from tariff rationalization-driven imports.
However, flood-related damages may add fiscal pressures and disrupt food supplies in affected areas. Inflation is projected to remain within the range of 4.0–5.0 percent in August 2025.
During FY2025, agricultural credit disbursement rose by 16.3 percent to Rs. 2,577.3 billion compared to Rs. 2,215.7 billion in FY2024. Imports of agricultural machinery and implements increased by 123.9 percent, reaching $14.4 million in July FY2026. In the 2025 Kharif season (April–July), urea offtake grew by 2 percent to 1,859 thousand tonnes, while DAP offtake recorded a marginal decline of 0.7 percent to 416 thousand tonnes.
The LSM sector registered a YoY increase of 4.1 percent in June 2025, though it declined by 3.7 percent on a month-on-month basis. Cumulatively, LSM output fell by 0.74 percent during FY2025, compared to marginal growth of 0.78 percent in the previous year.
In July FY2026, the current account deficit stood at $254 million, lower than the $348 million deficit recorded in July FY2025. Goods exports increased by 16.2 percent to $2.7 billion, while imports rose by 11.8 percent to $5.4 billion, resulting in a trade deficit of $2.7 billion compared to $2.5 billion last year.
In July 2025, the Bureau of Emigration & Overseas Employment registered 63,255 workers, a 23.9 percent increase from 51,072 in June 2025.
