Pakistan sets 4% growth target for next fiscal year; inflation at 8.2%

Pakistan's government has set an economic growth target of 4% for the upcoming fiscal year, FY2026-27, aiming to signal a continued growth trajectory. This follows a projected growth of 3.7% for the current fiscal year, falling short of the initial target of 4.2%. The Annual Plan Coordination Committee (APCC) cleared the macroeconomic framework on Monday, which will now be presented for formal approval to the National Economic Council (NEC) on June 3.

The commodity-producing sectors are expected to expand by 3.9% next year, with agriculture projected to grow by 3.8% and large-scale manufacturing by 4.5%. The services sector is targeted for 4.2% growth. These targets, however, are contingent on effective macroeconomic management and stable external conditions, according to a warning from the planning commission.

Inflation is targeted at 8.2% for the next fiscal year, a move anticipated to be supported by fiscal consolidation and improved macroeconomic stability. National savings are projected to grow to 14.3% of GDP, and investment is targeted to reach 15% of GDP, narrowing the savings-investment gap. Public investment is set to remain at 3% of GDP, while private investment is expected to rise to 10.3% of GDP.

Despite the growth targets, the planning commission highlighted a potential risk to the external sector. Easing import controls and debt repayments could widen the current account deficit. However, the government anticipates that strong remittance inflows, export recovery, and external financing will help manage these pressures.