Pakistan’s economic foundations have improved significantly since 2022 despite severe global and regional shocks, State Bank of Pakistan Governor Jameel Ahmad said on Wednesday, while cautioning that challenges still remain. He was speaking at the annual convocation of the Institute of Cost and Management Accountants of Pakistan, where he told graduating accountants that the country had “come a long way since 2022”.
The State Bank of Pakistan is the country’s central bank. It sets the policy interest rate, manages the currency’s external position and supervises banks. When its governor speaks about “fundamentals”, he means the basic health of the economy: prices, growth, foreign payments and the strength of banks.
Inflation, growth and the external account
On prices, the governor said inflation stayed close to the central bank’s target range during the last fiscal year, known as FY26. Inflation is the rate at which prices rise over a year; staying close to target means prices were still rising, but at a pace the central bank considers manageable. Inflation has risen since then, he said, but it is projected to ease gradually towards the target range for the middle of the current fiscal year, FY27, helped by careful monetary tightening — that is, keeping interest rates high enough to slow price rises.
On growth, he said real GDP growth recovered from a contraction in FY23 to 3.7 percent in FY26, and is expected to rise further in FY27. GDP, or gross domestic product, is the total value of goods and services produced in the country; a contraction means that total shrank. On the external account — Pakistan’s payments to and from the rest of the world — he said the current account deficit is expected to stay within 0 to 1 percent of GDP. The current account deficit is the gap when a country spends more on imports and foreign payments than it earns from exports and other inflows, so a small gap is easier to finance.
Why the governor credits tough decisions
The governor credited timely and decisive action, fiscal discipline and evidence-based policymaking for building resilience. Fiscal discipline means the government keeping its own spending and borrowing under control. He pointed to two difficult decisions in particular: raising the policy interest rate after keeping it steady for almost a year, and taking temporary measures to manage non-debt foreign exchange outflows — money leaving the country that does not create a matching asset or return. Both steps were unpopular, he acknowledged, but he argued they were necessary to restore stability and avoid a deeper external financing and debt crisis.
He added that the improvement is now being recognised by international credit rating agencies, multilateral partners such as lenders and development institutions, and foreign investors. Recognition of this kind matters because it affects how easily Pakistan can borrow abroad and attract investment, which in turn affects the rupee and the cost of imports.
What this means
For the ordinary reader, the governor’s message cuts both ways, and that is worth stating plainly. Slower inflation does not mean prices fall back to where they were; it means they rise more slowly from an already high level, so household budgets may still feel tight. A small current account gap and rising growth are genuinely better than the crisis conditions of 2022 and 2023, but the governor himself says challenges remain, and his forecasts are projections, not guarantees. The test for households will be whether prices, jobs and the rupee actually feel steadier in the months ahead, not whether one speech sounds optimistic.
Sources: Dawn, Business Recorder. Written in our own words for information only — not investment advice.