State Bank of Pakistan forecasts growth amid economic risks

The State Bank of Pakistan (SBP) has projected economic growth between 3.5% and 4.5% for fiscal year 2027. In its Half-Yearly Monetary Policy Report for August 2026, the central bank warned that geopolitical tensions, rising global commodity prices, and climate-related shocks remain significant risks to this outlook.

Despite these risks, the SBP expects inflation to stabilize near the upper end of its target range by the end of FY2027. The current account deficit is projected to remain between zero and 1% of GDP during FY2027. The central bank has also set a target to increase foreign exchange reserves to $20.20 billion by December 2026.

In a separate move to bolster trade, the Economic Coordination Committee (ECC) approved an Rs88 billion export subsidy package for fiscal year 2026-27. This initiative includes an expanded Export Finance Scheme (EFS), increasing its portfolio from Rs1 trillion to Rs1.5 trillion, and a new Rs350 billion Long Term Export Growth Financing Facility. The SBP has been directed to tighten oversight and strengthen safeguards to prevent the misuse of these financing schemes and to promote participation from small and medium-sized enterprises.