KARACHI: Macroeconomic indicators had been improving for the last three years, helping stabilise the economy, while higher large-scale manufacturing growth and improved GDP prospects pointed to further recovery, State Bank Governor Jameel Ahmad said on Friday.

Speaking at a press conference, Mr Ahmad said the economy was expected to grow by 4 per cent in the current fiscal year (FY27), stability had been achieved and inflation had remained within the range set for FY26.

He said the economy was gaining momentum, with growth picking up as reflected in 6pc growth in large-scale manufacturing, while growth in the sector had reached 10pc in certain months.

The governor said the expected 4pc growth in FY27 would be supported by expansion in the industrial sector.

Sees economy expanding at 4pc in 2026-27

He said inflation rose to 11.1pc in June, which was not expected, adding that the Gulf war and uncertainty arising from it had pushed up energy prices and ultimately increased inflation.

The governor expressed satisfaction over the external account, saying it had met requirements during FY26 and the State Bank had achieved its target.

He said the SBP’s foreign exchange reserves target of $18bn had been achieved. He termed it a major achievement that had also affected the current account.

Mr Ahmed said the current account deficit had narrowed from $17.5bn, or 4.7pc of GDP, in FY22 to $3.3bn in FY23 and $2.1bn in FY24, before turning into a surplus of $2.1bn, or 0.5pc of GDP, in FY25.

The current account remained in surplus during the first 11 months (July to May) of FY26, with the SBP projecting the full-year balance to remain within 0-1pc of GDP, placing it at the lower end of the central bank’s target range.

The current account data for June was not yet available, but it indicated that FY26 could end with either a very small deficit or a slight surplus. The improved current account helped bring stability to the economy and supported a stable exchange rate throughout FY26.

The governor said foreign exchange reserves had risen to $18.4bn from $13bn a year earlier.

He did not mention the share of remittances in the SBP’s foreign exchange reserves. Remittances have increased sharply during the last three years and crossed $40bn. The governor expected inflows to reach $41.5bn in FY26.

Mr Ahmad said higher reserves had eased foreign exchange constraints, supported external debt repayments and significantly reduced banks’ outstanding foreign exchange liabilities from $5.8bn in FY23 to $950m by the end of FY26.

Despite total external debt remaining broadly unchanged at around $100bn since FY22, foreign exchange reserves increased six-fold over the past three years, rising from about $3bn to $18.4bn.

Pakistan paid, including rollovers, about $26bn in external debt servicing in FY26, while FY27 may require more.

The governor said the government’s external debt profile had improved, with a gradual shift away from short-term commercial borrowing towards long-tenor multilateral financing with maturities of 20 to 25 years, resulting in a more favourable average debt maturity profile.

The SBP expects remittance inflows to increase further in FY27, reflecting continued confidence in external inflow trends.

Published in Dawn, July 4th, 2026