By Abdul Ghani

Pakistan’s information and communication technology (ICT) exports continued to gain momentum during FY26, with the digital economy emerging as an increasingly important source of foreign exchange earnings and export diversification, according to the State Bank of Pakistan’s Half Year Report 2025-26.

The report highlighted growth in ICT exports, expansion in computer services and rising activity in freelancing and fintech-related services as signs of gradual strengthening in Pakistan’s technology sector.

According to the SBP, the digital economy offers Pakistan an opportunity to diversify exports beyond traditional textile and commodity-based industries, which remain vulnerable to commodity-price fluctuations, freight disruptions and external demand shocks.

Pakistan’s broader export sector remained under pressure during H1-FY26.

The report said the country’s total exports declined 5 percent during the first half of FY26 despite growth in global trade, mainly because of lower rice exports, falling commodity prices and disruption linked to the closure of the western border.

Against this backdrop, Pakistan’s ICT exports are emerging as a high-value growth segment, distinguished by their lower dependence on imported raw materials and global shipping routes.

The SBP noted that building high-tech skills and digital capabilities could help increase foreign exchange earnings from IT and IT-enabled services in coming years.

The report also discussed the growing role of freelancing and digital services within the economy.

A dedicated section examined trends, opportunities and constraints facing Pakistan’s freelancing sector, highlighting the growing importance of remote-service exports and platform-based digital work.

According to the SBP, digital platforms and freelancing activity create opportunities for employment generation, particularly for younger workers entering the labour market.

The report further noted that increasing online searches related to fintech and digital services coincided with the expansion in ICT exports, reflecting rising domestic interest in technology-driven business.

Pakistan’s improving macroeconomic environment during H1-FY26 also supported growth in digital services.

Real GDP growth accelerated to 3.8 percent during H1-FY26 from 1.9 percent a year earlier, while average inflation declined to 5.2 percent from 7.2 percent in the corresponding period last year.

At the same time, the rupee appreciated by 1.3 percent during the review period, helping reduce exchange-rate volatility and improving business confidence.

The report said improving external-sector stability and reserve accumulation also strengthened confidence in formal financial channels and digital transactions.

SBP’s liquid foreign exchange reserves increased to $16.1 billion during H1-FY26, while workers’ remittances rose to $19.7 billion.

The central bank also highlighted the importance of digital financial integration in improving remittance efficiency.

Initiatives such as Raast-Buna integration were identified as mechanisms that could reduce remittance transaction costs and improve payment-system efficiency.

Despite the sector’s potential, the SBP acknowledged that Pakistan’s digital economy still faces major structural constraints.

These include limited high-tech skills, infrastructure gaps, weak technological upgrading and insufficient investment in advanced technology sectors.

The report also noted that structural weaknesses, policy inconsistencies and governance gaps continue to discourage investment in productive and export-oriented sectors.

The SBP stressed that strengthening digital capabilities and expanding technology-based exports will be important for Pakistan’s long-term productivity growth, export diversification and external-sector stability.

Credit: INP-WealthPk