Performance of Key Economic Indicators

 

---Rooma Mehmood---

Revenue Generation and Fiscal Health

​Pakistan’s domestic revenue mobilization demonstrated vigor in the first quarter of FY 2025-26. FBR Tax Collections registered a year-on-year (YoY) growth of 12.5%, reaching Rs. 2,884 billion during the July-September period.

 Headline inflation (CPI) generally remained subdued at 4.2% over the quarter, though September recorded an uptick to 5.6% due to flood-induced supply disruptions. 

These figures reflect ongoing underlying economic formalization and robust fiscal effort.

External Sector Dynamics

​External accounts, however, reveal acute vulnerability. Critical remittance inflows provided stabilizing support, increasing by 8.4% YoY to $9.5 billion.

This stability was undermined by a sharp increase in goods imports, which surged by 13.5% to $16.9 billion.

 This import surge, largely driven by emergency relief and reconstruction needs following the floods, combined with a slight dip in exports (3.8%), resulted in a widening of the trade deficit to $9.3 billion, up significantly from the $7.0 billion recorded in the previous corresponding period.

This creates a paradox: strong internal fiscal effort is currently being overridden by the external account pressures imposed by the necessity of climate change response. 

The widening deficit necessitates continued debt management and external financing support to prevent destabilization of the nation's external reserves.