By Moaaz Manzoor

Pakistan’s exports of goods and services recorded steady growth during FY2025-26, reflecting improving industrial activity and recovery in external demand despite rising geopolitical and energy-related risks, according to the Ministry of Planning’s Monthly Development Update for May 2026.

The report stated that large-scale manufacturing expanded 6.5 percent during July-March FY2025-26 after contracting 1.9 percent a year earlier.

The report noted that textiles, wearing apparel, petroleum products and food manufacturing contributed to industrial recovery and export activity.

Textile production returned to positive growth with 0.8 percent expansion, while wearing apparel grew 6.6 percent during the review period.

The broader industrial sector also showed strong improvement, recording growth of 8.1 percent during the first half of FY2025-26.

According to the report, export growth supported Pakistan’s external account during a period of elevated global uncertainty and rising commodity prices.

However, imports increased at a faster pace. Imports of goods and services rose 8.3 percent to $56.3 billion during July-March FY2025-26 because of higher petroleum costs and stronger demand for industrial and capital goods.

As a result, Pakistan’s current account surplus narrowed sharply to only $0.008 billion during the review period compared with $1.67 billion a year earlier.

The report indicated that rising global oil prices significantly affected external-sector dynamics during March and April 2026.

Dubai crude reportedly surged to nearly $170 per barrel following escalation of conflict in the Middle East, driving up global freight, transportation and energy costs.

The increase in fuel prices also accelerated domestic inflation in Pakistan. Headline inflation climbed to 10.9 percent in April 2026 compared with 0.3 percent in the same month last year.

Despite external pressures, the report stated that Pakistan’s broader economic stabilization momentum continued during FY2025-26.

GDP growth accelerated to 3.8 percent during the first half of the fiscal year, while private-sector credit increased 12.7 percent to Rs10.79 trillion by April 24, 2026.

Workers’ remittances also increased 8.5 percent to a record $33.9 billion during July-April FY2025-26, helping support foreign exchange reserves and external stability.

The report emphasized that sustaining export growth would require continued industrial expansion, stable energy supplies and stronger competitiveness in international markets.

The development outlook also stressed the importance of fiscal discipline, efficient implementation and resilience against external shocks amid volatile global commodity markets and geopolitical uncertainty.

Credit: INP-WealthPk