Is Pakistan’s crisis-ridden economy finally recovering?

Ahead of the country’s budget on Wednesday, inflation is down, forex reserves are up. But analysts warn it’s early days.

Islamabad, Pakistan – The Pakistani government will present its annual budget on Wednesday, seeking to balance domestic commitments to the country’s 240 million people and demands of fiscal prudence from the International Monetary Fund (IMF) – a key source of loans.

Aiming to increase its gross domestic product (GDP) growth rate to more than 3.5 percent from 2.38 percent in the outgoing fiscal year, the country is looking to revive its economy, which has faced a nearly two-year slump following political volatility.

Pakistani authorities have held multiple meetings with the IMF recently. Prime Minister Shehbaz Sharif, who came to power as the head of a patchwork coalition after the February elections, has been at the forefront of these efforts.

Sharif recently travelled to Saudi Arabia, the United Arab Emirates, and China – countries considered Pakistan’s closest allies and key to supporting its economy – to discuss opportunities for driving foreign direct investment in Pakistan.

But is Pakistan’s economy showing signs of revival? Are the government’s measures helping everyday people? And what do analysts think the next budget should prioritise?

Latest figures from the country’s central bank and international bodies like the IMF paint a cautiously optimistic economic forecast.

Pakistan’s inflation, which had skyrocketed to 38 percent a year ago in May 2023, has slowed down to 11.8 percent over the past 12 months, as reported by Pakistan’s Bureau of Statistics. A kilogram (2.2 pounds) of wheat, which would cost more than 130 rupees ($0.47) last year in May, is down to 102 rupees ($0.37)  this year.

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