By Abdul Ghani

Pakistan maintained broad current account stability in FY2025-26 despite rising imports and continued global economic uncertainty, supported by strong remittance inflows, growing services exports and improved external sector management, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The survey highlights the external sector as one of the key areas for improvement during the fiscal year, noting that Pakistan managed external account pressures while supporting economic recovery and increased business activity.

According to the survey, the current account remained broadly balanced during FY2025-26 despite higher import demand associated with economic growth, industrial recovery and increased domestic consumption.

The Ministry of Finance notes that the external sector's performance reflected a combination of stronger foreign exchange inflows, prudent macroeconomic management, and improved investor confidence.

Workers' remittances remained the largest source of support for the current account. The survey shows that remittance inflows increased by 8.2% to $30.3 billion during FY2025-26, providing critical support to foreign exchange reserves and helping offset trade-related pressures.

The report notes that overseas Pakistanis continued to play a vital role in supporting the country's external position through sustained inflows from major labour markets, particularly the Gulf region, the United Kingdom and North America.

According to the survey, services exports also contributed positively to external sector stability. ICT export remittances rose by 19.7% to $3.38 billion, while freelancer exports increased by 51% to $856.3 million.

The rapid growth of technology-related exports helped diversify Pakistan's foreign exchange earnings and reduce reliance on traditional export sectors.

The survey highlights that the country's digital economy is playing an increasingly important role in strengthening the external account through knowledge-based and technology-driven exports.

While exports and remittances performed strongly, imports also increased during FY2025-26 as economic activity recovered.

According to the report, higher industrial production, increased demand for raw materials, machinery imports and growing petroleum consumption contributed to rising import volumes.

Petroleum imports remained a major component of the import bill. The survey notes that Pakistan imported larger quantities of petroleum products and crude oil during the fiscal year to meet growing energy demand.

Despite higher imports, the external account remained manageable because of strong inflows from remittances and services exports.

The survey points out that exchange rate stability played an important role in supporting external sector confidence. The rupee remained broadly stable during FY2025-26, helping businesses plan trade and investment activities with greater certainty.

Foreign exchange reserves also improved during the fiscal year, strengthening the country's ability to meet external obligations and absorb potential external shocks.

According to the Ministry of Finance, the improvement in reserves reflected stronger foreign exchange inflows, better external account management and enhanced macroeconomic stability.

The survey notes that fiscal consolidation efforts also contributed indirectly to external sector stability by reducing financing pressures and strengthening confidence in the economy.

Pakistan's economy grew by 3.7% during FY2025-26, while inflation moderated significantly compared with previous years. These developments helped improve the overall economic environment and supported confidence among investors and international stakeholders.

The report highlights that maintaining external sector stability remains a key policy objective because of its direct impact on exchange rate stability, inflation, investment and economic growth.

According to the survey, ongoing reforms aimed at export promotion, investment facilitation, digitalization and productivity enhancement are expected to strengthen the country's external position further.

The Ministry of Finance notes that continued growth in remittances, services exports and investment-related inflows will remain important for sustaining external sector resilience as the economy expands.

With the current account remaining broadly balanced despite rising import demand and global uncertainties, FY2025-26 saw improved external sector stability, supporting Pakistan's broader economic recovery and macroeconomic management efforts.

Credit: INP-WealthPk