ISLAMABAD: Pakistan recorded growth in workers’ remittances, exports and foreign direct investment during the first quarter of fiscal year 2026-27, while higher imports and inflation continued to pose challenges for the economy.
According to the Ministry of Finance’s monthly economic outlook, workers’ remittances increased by 14% year-on-year to $10.9 billion during July-September 2026. In September alone, inflows reached $3.6 billion, up 12.7% from the same month last year.
The increase in remittances provided additional foreign exchange support at a time when Pakistan continued to face pressure from its import requirements and external financing needs.
Exports also showed improvement. Goods exports rose by 7.7% year-on-year to $8.5 billion during the first quarter, while September exports increased by 15.5% to $3 billion.
Including services, total exports reached $11.2 billion during the quarter, marking an annual increase of 11%. Information technology and technology-related exports contributed to the expansion, with their combined value rising 18% to $1.25 billion, according to published figures from the quarterly scorecard.
Imports, however, increased at a faster pace than goods exports. The supplied figures show that imports rose by 14.1% to $17.8 billion during the first quarter. In September, imports climbed 22.7% year-on-year to $6.2 billion.
The faster growth in imports highlights the need to strengthen export earnings and manage foreign exchange demand. Higher imports can reflect increased domestic demand and industrial activity, but they can also widen the trade gap when export growth does not keep pace.
Foreign direct investment provided another positive indicator. Net FDI increased by 19.9% year-on-year to $719.7 million during July-September. In September, the inflow reached $219.5 million.
The State Bank of Pakistan’s foreign exchange reserves stood at $21.5 billion in October, according to the Finance Ministry’s quarterly scorecard. Total liquid foreign exchange reserves, including commercial banks’ holdings, reached $26.8 billion, providing more than three months of import cover.
The rupee was quoted at Rs278.60 against the US dollar on October 28. The exchange rate remains an important indicator for import costs, inflation and the country’s external payments position.
On the fiscal front, Federal Board of Revenue tax collections totalled Rs3,086.2 billion during the first quarter. Collections reached Rs1,363.8 billion in September, representing an annual increase of 11.5%, according to the supplied figures.
Federal non-tax revenue amounted to Rs 2,365.9 billion during the quarter. The overall fiscal balance recorded a deficit of Rs1,197.9 billion, while the primary balance posted a surplus of Rs2,311.2 billion.
The distinction is significant because the primary balance excludes interest payments on government debt. A primary surplus can therefore coexist with an overall fiscal deficit when debt-servicing costs and other expenditure are taken into account.
Agricultural financing also expanded. Banks disbursed Rs 540.5 billion in agricultural loans during the first quarter, an increase of 32.7% compared with the same period last year. Greater access to credit can support farm inputs, production and investment, although its longer-term impact depends on repayment capacity and agricultural output.
Inflation remained a concern despite improvements in several economic indicators. The reported average inflation rate for the first quarter was 10.2%, while September inflation reached 10.3%, compared with 5.8% a year earlier.
The policy rate stood at 12% on October 26. Borrowing costs, food and energy prices, and exchange-rate movements will remain important factors influencing inflation and economic activity in the coming months.
Industrial production recorded a modest improvement, with large-scale manufacturing output rising 1.85% during the first quarter. Growth in August stood at 0.67%, indicating that the recovery in industrial activity remained uneven.
The Pakistan Stock Exchange also showed an annual improvement. The benchmark index stood at 165,736 points on October 28, up 3.52% compared with October last year. Market capitalisation was reported at Rs18.33 trillion, equivalent to $66.22 billion.
Business formation provided another encouraging signal. New company registrations reached 15,440 during the first quarter, an increase of 37.3% year-on-year. The rise suggests greater formal business registration, although registration numbers alone do not establish how many new businesses become operational or create jobs.
Taken together, the indicators point to stronger remittance inflows, export earnings, investment and foreign exchange reserves. However, higher imports, rising inflation and the overall fiscal deficit show that important vulnerabilities remain.
The durability of the improvement will depend on whether Pakistan can translate these gains into sustained export growth, productive private investment, stronger industrial output and more stable prices.
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