ISLAMABAD: The State Bank of Pakistan (SBP) on Monday released its biannual Monetary Policy Report, highlighting a noticeable improvement in the country’s macroeconomic conditions and outlook, supported by a cautious monetary policy stance and ongoing fiscal consolidation.
According to the report, inflation is expected to remain within the target range of 5 to 7 percent for most of FY2026 and FY2027, although some short-term volatility may occur.
The SBP stated that the current account deficit in FY2026 is projected to remain between 0 and 1 percent of GDP. While the trade deficit is expected to stay elevated, it will likely be partially offset by strong workers’ remittances and planned official inflows.
As a result, Pakistan’s foreign exchange reserves are projected to reach $18 billion by June 2026 and further increase in FY2027, approaching nearly three months of import cover.
The report also noted that continued macroeconomic stability, easing financial conditions, and the recent reduction in the Cash Reserve Requirement (CRR) to 5 percent have contributed to stronger economic activity.
Consequently, growth prospects have improved, with real GDP growth for FY2026 now projected between 3.75 and 4.75 percent, while economic growth is expected to strengthen further in FY2027, reflecting a gradual and sustained recovery trajectory.