By Arman Sabir
TradeTrend
Published: Oct 3, 2026
KARACHI, October 3, 2026: Pakistan’s economic indicators are improving, with growth accelerating, foreign-exchange reserves strengthening and remittances rising, but the bigger question is why that recovery has not brought visible change inside households.
Pointing to stronger reserves, rising remittances, and IT exports, Prime Minister Muhammad Shehbaz Sharif recently credited the economic situation to the efforts of a “new team.” The official record confirms several of the indicators he cited: the economy grew 3.70 percent in FY2025–26, while workers’ remittances reached $30.3 billion and the current account recorded a surplus during July–March.
"نیویارک میں آئی ایم ایف کی مینجنگ ڈائریکٹر کو ملا تو ان کے یہ لفظ تھے جن کو میں کوٹ کر رہا ہوں
— Government of Pakistan (@GovtofPakistan) October 1, 2026
“Prime Minister, this is a new Pakistan.”
میں نے اس کے جواب میں کہا کہ یہ نیا پاکستان نہیں ہے بلکہ ایک نئی ٹیم ہے جنہوں نے مل کر پاکستان کے معاشی حالات کو سدھارا ہے۔
ہمارے اسٹیٹ بینک… pic.twitter.com/H7ae1YXVNP
But macroeconomic recovery is measured in aggregates, while households experience the economy through incomes, wages, employment, prices and consumption.
The Recovery Behind the Numbers
The Pakistan Economic Survey 2025–26 puts real GDP growth at 3.70 percent, compared with 3.18 percent in the previous fiscal year, with services expanding 4.09 percent, industry 3.51 percent and agriculture 2.89 percent.
Services remained the largest component of the economy, accounting for 58.42 percent of GDP, while large-scale manufacturing grew 6.11 percent. The sectoral figures show different rates of expansion across the economy.
Real GDP & Sectoral Growth Rates (FY2025–26)
Source: Pakistan Economic Survey 2025–26 (Figures in % growth) - TradeTrend Graphics
External accounts also recorded improvement. Workers’ remittances reached $30.3 billion during July–March FY2026, an increase of 8.2 percent, while the current account recorded a surplus during the same period. By September 18, total liquid foreign-exchange reserves stood at $26.81 billion, including $21.40 billion held by the State Bank of Pakistan and $5.41 billion with commercial banks.
The improvement in the external position has coincided with continued expansion in information-technology exports and greater exchange-rate stability.
The business and consumer record provides another view of the recovery. The Federation of Pakistan Chambers of Commerce and Industry has raised concerns about energy, taxation and financing costs, while trader representatives have raised concerns about operating expenses and purchasing power. Consumer organisations have separately highlighted food prices, electricity charges and other household costs.
When the Economy Reaches the Household
The Household Integrated Economic Survey (HIES) 2024–25 records a substantial rise in nominal household income since 2018–19. Average monthly income increased from Rs41,545 to Rs82,179, while the increase differed across the five income groups, from Rs23,192 to Rs41,851 for the first quintile and from Rs63,544 to Rs139,317 for the fifth.
Nominal Monthly Household Income by Quintile
Source: HIES 2018-19 vs HIES 2024-25 (Figures in PKR)
Consumption also rose over the period. Average monthly per-capita consumption increased from Rs5,959 to Rs13,240. The figures are nominal, however, and span a period of substantial inflation, so the increase in income cannot by itself establish a corresponding increase in purchasing power.
The Labour Force Survey (LFS) 2024–25 adds the employment dimension. Average monthly wages were Rs39,042, with the formal-sector average at Rs54,038 against Rs30,834 in informal employment. Informal employment accounted for 72.5 percent of total employment, while agriculture recorded an average monthly wage of Rs22,878.
The latest consumer-price data show that pressure on household budgets has not disappeared with macroeconomic stabilisation. The Pakistan Bureau of Statistics reported 10.26 percent year-on-year inflation in September 2026, with transport prices rising 27.43 percent and food and non-alcoholic beverages 8.20 percent.
The Consumers Association of Pakistan has called for measures addressing food prices, electricity charges and other consumer costs, while trader representatives have raised concerns about taxation, operating expenses and purchasing power. The Federal Board of Revenue’s September update on the special tax scheme for small shopkeepers records continuing practical and technical feedback from traders and market representatives during its initial implementation.
Who Is Participating in the Recovery?
Differences in inflation, household finances, poverty and the structure of economic activity provide several ways to examine how the recovery is being experienced across income groups and types of economic activity.
Research by the Applied Economics Research Centre at the University of Karachi found that lower-income groups experienced higher inflation than higher-income groups during periods of double-digit inflation, with food carrying a greater weight in lower-income household budgets.
Gallup Pakistan's August 2025 household survey found that 47 percent of households could meet basic necessities but had little left for non-essential spending, while 39 percent said they struggled to meet basic needs without assistance. The proportions were higher in rural than urban areas.
The Social Policy and Development Centre has produced a different estimate of poverty using an alternative methodology applied to HIES 2024–25 data. SPDC estimated poverty at 43.5 percent compared with the official estimate of 28.9 percent and reported a substantial rise in measured income inequality. The two estimates use different methodologies and therefore are not directly interchangeable.
Labor Force Monthly Wages vs. September 2026 Inflation
Source: Labor Force Survey 2024–25 & PBS September 2026 Update - TradeTrend Graphics
The Sustainable Development Policy Institute has examined the participation question through taxation, formalisation, access to finance, energy costs and the distribution of income and wealth. At its April 2026 policy dialogue on taxation and economic reform, SDPI researchers and participating experts pointed to a concentrated distribution of income and wealth and limited formalisation of Pakistan’s enterprise base, while identifying access to finance, energy costs and taxation as constraints affecting smaller businesses. SDPI Executive Director Dr Abid Qaiyum Suleri called for a shift towards equitable and progressive taxation, while participants raised concerns about the distribution of the tax burden and the structure of tax exemptions.
The Pakistan Institute of Development Economics has identified weak productivity and resource misallocation as persistent constraints on Pakistan’s growth. Its research also points to skills, technology, competition, quality certification, firm capabilities and better allocation of resources as factors associated with stronger productivity.
From Stabilisation to Sustainable Growth
The government is now describing the next phase in terms of sustainable growth, employment, exports, productivity and investment. At the October 1 gong ceremony for the listing of the Naya Nazimabad Apartment REIT, Prime Minister Muhammad Shehbaz Sharif said Pakistan needed growth driven by technology, employment generation, production and exports, while also calling for greater productivity and modernisation of machinery.
The Prime Minister also criticised industries that had received substantial subsidies and tariff protection but had repeatedly failed to achieve the competitiveness and import substitution expected from them. He called instead for modern machinery, productivity and greater competitiveness.
The reform agenda being discussed with international partners is broader than the headline growth target. In its discussions with the Finance Ministry, the World Bank proposed measures covering the investment climate, access to finance for small and medium enterprises, sectoral productivity and labour-market outcomes. The proposed package also includes export-finance products for the Export-Import Bank of Pakistan, reforms to insolvency and factoring frameworks, tariff reforms, skills development and greater international recognition of Pakistani qualifications. The World Bank and Finance Ministry stressed moving from reform design to implementation and achieving measurable improvements in economic activity, investment and jobs.
The proposed reforms also extend into taxation, capital markets and public-sector efficiency. Discussions covered GST harmonisation, agricultural income-tax implementation, property-tax reform, capital-market development, domestic bond markets, debt management and institutional effectiveness.
The United Kingdom has separately identified investment facilitation, regulatory efficiency, public-private partnerships, SME internationalisation and longer-term financing as areas for cooperation. Finance Minister Muhammad Aurangzeb has described the government's priorities as making macroeconomic stability permanent, moving towards sustainable and inclusive growth, continuing structural reforms, shifting from aid towards trade and investment, expanding access to finance and positioning Pakistan for the “New Economy.”
Regulatory reform has also moved into an implementation phase. At a meeting chaired by the Prime Minister, the government reviewed measures intended to simplify business regulations and coordinate reforms across federal and provincial jurisdictions. The Prime Minister directed that reforms already approved by the Cabinet be implemented on time and said business entities should derive tangible benefits from them. He also directed the Special Investment Facilitation Council and Punjab's chief secretary to complete integration of eBiz Punjab and BFC Islamabad by March 2027.
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