Ahsan-iqbal-copyFederal Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal on Monday said the government was pursuing a strategy of sustainable, export-led growth to steer the economy away from recurring boom-bust cycles and ensure long-term stability.
“We have consciously decided that we have to take the path of sustained growth,” he said while addressing a news conference after chairing the Annual Plan Coordination Committee (APCC) meeting for the 2026-27 budget.
He said the government would avoid consumption-driven economic expansion that could destabilise the economy, stressing that exports remained the only viable path to durable growth. “If we want to increase exports and growth together, we have to achieve growth through exports. Growth that is not backed by exports will always be unsustainable,” he remarked. The minister said Pakistan had made significant progress in stabilising the economy after facing severe financial challenges in 2022.
He said the country had successfully averted a default situation and restored macroeconomic stability through prudent economic management. Ahsan said inflation, which had surged to 38 per cent, had been brought down to around 5-6 per cent, while the policy rate had declined from 23 per cent to 10.5 per cent, reflecting improving economic fundamentals. He said Pakistan had expected economic growth of over 4 per cent during the current fiscal year, but global economic uncertainties and the Gulf crisis had adversely affected growth prospects worldwide.
The minister said the recent Gulf situation had triggered a broader global economic crisis, affecting economies across 193 countries. He said international institutions had also revised global growth forecasts downward while inflation projections had been adjusted upward, reflecting widespread economic uncertainty.
Ahsan added that Pakistan, like other economies, had also felt the impact of these external shocks, particularly through pressure on fuel prices and inflationary trends.
Despite these challenges, he said, the economy was projected to grow by 3.7 per cent, compared with 3.2 per cent last year, demonstrating continued economic resilience.
The minister said the size of Pakistan’s economy had increased from $408 billion to $452 billion, describing it as a notable gain despite difficult global conditions.
He cautioned against pursuing rapid growth through excessive imports and unrestrained consumption, saying such policies had previously created large external imbalances and put pressure on foreign exchange reserves.
“It is not difficult to increase growth, but we do not want a growth model that shakes the foundations of Pakistan’s economy,” he said. Ahsan said the government’s strategy focused on enhancing the productive capacity of the economy by modernising agriculture, strengthening industry and improving competitiveness in the technology and services sectors. He said 1,000 agricultural experts had been sent to China for training as part of efforts to modernise the agriculture sector, which would remain a key component of CPEC’s second phase. The minister said the objective was not only to achieve food security but also to increase exports through value-added agricultural production.
Highlighting sectoral performance, he said agriculture grew by 2.9 per cent during the current fiscal year compared with 1.5 per cent a year earlier, while industry expanded by 3.5 per cent and the services sector recorded growth of 4.1 per cent against 3.1 per cent last year. He said workers’ remittances remained strong, reaching nearly $34 billion during July-April compared with $31.2 billion in the corresponding period last year. Ahsan said foreign exchange reserves stood at $21.3 billion by April 2026, terming it a positive indicator of economic stability.
Referring to development spending, he said the proposed Public Sector Development Programme (PSDP) for 2026-27 had been set at Rs1.126 trillion, adding that fiscal constraints arising from high debt-servicing obligations continued to limit the government’s development spending capacity.
He said nearly half of the government’s current expenditure was being consumed by debt servicing, leaving limited fiscal space for development initiatives.