Pakistan Economy Shows Improvement in First Two Months of FY2027

ISLAMABAD: Pakistan’s economy has shown several positive trends during the first two months of fiscal year 2026-27, with improvements recorded in the current account, remittances, services exports and large-scale manufacturing.

The country’s current account deficit narrowed significantly during the period, while foreign-exchange earnings from overseas Pakistanis and technology-related services continued to rise.

According to State Bank of Pakistan data, the current account deficit fell by 36 percent to $543 million during July-August FY2027, compared with $853 million during the same period last year.

The deficit in August alone stood at $98 million, down 70 percent year-on-year from $324 million and 78 percent from the revised July figure of $445 million.

The improvement was supported largely by stronger workers’ remittances and a reduction in the services deficit.

Overseas Pakistani workers sent approximately $7.3 billion during the first two months of FY2027, representing a 14.7 percent year-on-year increase.

In August alone, remittance inflows rose 16.5 percent year-on-year to around $3.7 billion, according to the State Bank.

The increase in remittances has provided important support to Pakistan’s external account and foreign-exchange position.

Pakistan’s services exports increased by around 29 percent during July-August FY2027, reaching $1.811 billion, compared with $1.405 billion in the corresponding period of the previous year.

Information technology and telecommunications services remained a major contributor, with exports rising 17.4 percent to $811 million during the first two months.

The government has also cited a 42 percent year-on-year increase in freelancer export earnings in August, underlining the growing contribution of Pakistan’s digital workforce to foreign-exchange earnings.

Large-scale manufacturing also showed signs of recovery.

According to Pakistan Bureau of Statistics data, the Large Scale Manufacturing Index increased 3 percent year-on-year and 9.5 percent month-on-month in July 2026.

The recovery followed a decline in June and was supported by strong growth in sectors including automobiles, wearing apparel, tobacco and transport equipment.

Corporate activity has also remained active, with the Securities and Exchange Commission of Pakistan registering 4,761 new companies in August 2026. SECP had registered a record 5,438 companies in July.

The continued pace of company registrations indicates sustained interest in formal business incorporation, although the monthly figures should be viewed alongside broader investment and business-activity indicators.

The latest indicators point to an improvement in several areas of Pakistan’s external sector during the opening months of FY2027.

Stronger remittances, rising services and IT exports and a narrower current account deficit have helped strengthen the external position, while the recovery in large-scale manufacturing points to improving industrial activity.

However, the goods trade deficit also widened during July-August, showing that external-sector pressures have not disappeared.

The latest figures therefore present a mixed but comparatively stronger start to FY2027, with policymakers now facing the challenge of converting short-term external stability into sustained investment, export growth and broader economic expansion.