Finance ministry paints optimistic economic picture despite growing overseas job migration and persistent structural challenges
The Ministry of Finance on Monday released its final monthly economic outlook for the fiscal year 2024–25, highlighting modest GDP growth and rising overseas job migration as defining features of the year that concluded on June 30.
According to the report, Pakistan’s economy posted a real GDP growth of 2.7%, supported by “strengthened macroeconomic fundamentals, prudent fiscal management, and improved external sector performance.” However, the figure remains contested by independent economists, and despite Finance Minister Muhammad Aurangzeb’s offer to establish a review committee, no such effort has yet materialised.
Labour Migration Surges
The report also revealed a sharp uptick in labour migration. In May 2025 alone, 59,995 Pakistanis registered with the Bureau of Emigration & Overseas Employment, marking a 12.7% increase from April’s 53,231. Cumulatively, 285,370 workers left the country between January and May, with the majority hailing from Punjab and headed primarily to Saudi Arabia.
This growing exodus coincides with an increase in remittance inflows, which reached $34.9 billion—a 28.8% year-on-year rise—thanks in part to a shift from informal to formal transfer channels. Most of the gains came from Saudi Arabia and the UAE, with inflows from these two countries increasing by 20.4%.
Mixed Signals on Inflation and Manufacturing
The ministry reported that inflation slowed to 3.5% in May, driven by lower food prices, and forecasted it would remain in the 3–4% range for June. However, the Monetary Policy Committee (MPC) opted to maintain the benchmark interest rate at 11%, citing risks related to inflation, external shocks, and regional instability. Critics argue that such high rates primarily benefit commercial banks while stifling growth and investment.
For the new fiscal year starting July 1, the finance ministry projects inflation to rise slightly, falling between 5% and 7%.
Large-Scale Manufacturing (LSM) Struggles
While some optimism surrounds LSM indicators like cement dispatches and automobile sales, actual performance remains sluggish. LSM grew 2.3% year-on-year in April, but contracted 3.2% compared to March. Over the first 10 months of FY2025, LSM posted a cumulative decline of 1.5%. For the government to meet its annual GDP growth target, LSM would need to surge by more than 8% in May and June—a scenario many analysts see as unlikely.
Out of 22 tracked LSM sectors, 12 showed positive growth, including textiles, apparel, petroleum products, beverages, and pharmaceuticals.
Trade and External Account Overview
Despite slow export growth, the external sector showed signs of resilience. The current account recorded a surplus of $1.8 billion during the July–May period, reversing a $1.6 billion deficit from the previous year. However, this was offset by a widening trade deficit: goods exports increased by only 4% to $29.7 billion, while imports surged by 11.5% to $54.1 billion, expanding the trade gap to $24.4 billion, up from $20 billion last year.
Structural Reform and Agriculture Outlook
The ministry reiterated the government’s commitment to structural reforms—especially in tax harmonisation, energy pricing, and privatisation—while also emphasizing climate resilience and inclusive growth.
In agriculture, the ministry projected a rebound in cotton output following a steep 31% decline last season. For the 2025–26 Kharif season, it has targeted 2.2 million hectares of cotton cultivation and 10.2 million bales in output. Improved availability of quality seeds, fertilisers, credit, and machinery has supported this outlook, the report noted.
Conclusion
While the finance ministry maintains an upbeat tone about economic recovery, the growing number of workers seeking employment abroad, struggling industrial output, and contested growth figures point to deeper challenges. Analysts caution that without a clear roadmap for turning short-term stabilisation into long-term, sustainable growth, the current momentum may prove fleeting.
