ISLAMABAD: Pakistan’s monetary policy is likely to remain cautious despite improving economic indicators, as inflationary pressures, global uncertainties, and external risks continue to influence the country’s economic outlook, S&P Global Market Intelligence said.
The assessment came after the State Bank of Pakistan (SBP) decided to keep the policy rate unchanged at 11.5% during its July 2026 Monetary Policy Committee meeting.
According to S&P Global Market Intelligence, the decision reflects a relatively stable macroeconomic environment, supported by easing external pressures, recovery in economic activity, and improving business confidence.
Ahmad Mobeen, Principal Economist at S&P Global Market Intelligence, said Pakistan’s economic conditions have shown signs of improvement, but the central bank is expected to maintain a careful approach due to ongoing challenges.
He highlighted that inflation remains above the SBP’s target range, while risks including renewed tensions in the Middle East, fluctuations in global commodity prices, and the possibility of a severe El Niño weather event could impact the economic outlook.
“External buffers are improving, but repayment pressures and dependence on official inflows and rollovers mean maintaining policy discipline will remain essential,” Mobeen said.
Pakistan’s GDP Growth Forecast at 3.5%
S&P Global Market Intelligence has projected Pakistan’s real GDP growth at 3.5% for fiscal year 2027, citing improving economic fundamentals and a gradual recovery in economic activity.
The firm said the growth outlook remains positive but warned that external shocks, commodity price volatility, and climate-related risks could pose challenges to economic stability.
Foreign Reserves Seen Rising to $19.5 Billion
Pakistan’s external position is expected to strengthen further, driven by strong remittance inflows and planned official financing support, according to the report.
S&P Global projects the country’s foreign exchange reserves to reach $19.5 billion by December 2026.
The current account deficit is forecast at 0.7% of GDP in calendar year 2026 and 0.9% of GDP in 2027, reflecting continued improvement in external sector conditions.
Economic analysts believe Pakistan’s recovery will depend on sustaining reforms, controlling inflation, strengthening foreign exchange reserves, and managing global economic risks effectively.
