Finance Minister Muhammad Aurangzeb on Monday unveiled the Economic Survey of Pakistan 2024-25, hailing progress in several sectors while blaming climate change for a drastic decline in agricultural output.
The Survey states that the agricultural sector’s growth recorded a 9-year low of just 0.56%. Previously it had recorded 0.41% growth in FY16 while the average growth of the past five years has been 3.38%. The report attributed the low growth to a decline in important crops production and cotton ginning, 13.5% and 19%, respectively. The worst-hit crops were cotton (-30.7%), wheat (-8.9%), sugarcane (-3.9%), maize (-15.4%), and rice (-1.4%). However, it noted, other crops posted a moderate growth of 4.78%, while livestock, forestry and fishing posted growths of 4.72%, 3.03% and 1.2%, respectively.
The finance minister attributed the decline to climate challenges, noting that 2024 was Pakistan’s ninth-warmest year in 64 years, with an average temperature of 23.52 degrees Celsius. At the same time, he said, rainfall was 31% above historical levels but several parts of the country experience a months-long drought.
During his press conference, Aurangzeb maintained the government has implemented key structural reforms to ensure sustainable economic growth and will continue these measures in the coming fiscal years. Highlighting progress in several sectors such as energy, pensions and fiscal management, he noted that recoveries in power distribution companies had improved due to governance reforms, including the establishment of professional boards.
He said the government had secured Rs. 1.25 trillion through banks to address circular debt. Additionally, he said, declining interest rates are projected to save between Rs. 800 billion and 1 trillion in interest expenses for the 2024-25 fiscal year.
“Next year will be a turnaround story,” maintained the minister, emphasizing the need to shift from economic stabilization to GDP stabilization. “We are currently moving in a better direction,” he added.
Aurangzeb confirmed that the government would implement a defined contribution pension plan for new government recruits from July 1, 2024 as part of efforts to overhaul the pension system. He said the rightsizing of the federal government was already underway, adding there was little space for additional cuts.
The Survey projects remittances for the outgoing fiscal year to total $37-38 billion, adding freelancers contributed over $400 million to Pakistan’s $3.1 billion in I.T. exports. The minister noted International Monetary Fund projections expected global economic growth to slow to 2.8% in 2025, down from 3.3% in 2024. Domestically, he said, the average maturity of government debt has increased from 2.9 to 3.5 years, meeting one of the IMF’s key targets.
Macroeconomics
Based on the Economic Survey, as well as numbers reported by the National Accounts Committee, Islamabad has provisionally recorded real GDP growth of 2.68% during FY25. This is broadly in line with revised projections of both the IMF and the World Bank though falls shorts of the government target of 3.6%. In a report, Topline Securities said it expected this number to be revised down, as it relies on industrial growth estimates of 4.77% despite actual growth in the first nine months of FY25 at -1%.
The current account remained in Surplus in the first 10 months of the outgoing fiscal, with the full year also projected to close in surplus.
Industrial sector growth
The Economic Survey records provisional growth of industries at 4.77%, the highest in 4 years, and in stark contrast to a contraction of 1% recorded in the first nine months of the outgoing fiscal year. Within this, electricity gas and water supply, construction, and manufacturing sector are likely to grow by 28.88%, 6.61%, and 1.34%, respectively. Mining and quarrying, and large-scale manufacturing are expected to post declines of 3.38% and 1.53%, respectively.
Services sector growth
The services sector has posted provisional growth of 2.91% in FY25 compared to 2.19% in FY24. Within services, Public Administration and Social Security (General Government) saw highest growth of 9.92% while wholesale and retail trade saw a meagre 0.14% rise. Topline Securities has said it believes the services numbers for FY25 will be revised up as 9MFY25 growth average is already 2.97%.
Revenue
In fiscal terms, total revenues grew by 36.7% to Rs. 13,367 billion during July–March FY2025, including a 26.3% rise in tax revenues to Rs. 9,300.2 billion, and a sharp 68% increase in non-tax revenues to Rs. 4,229.7 billion. The FBR’s tax collection matched the overall tax figure, also at Rs. 9,300.2 billion. The fiscal deficit narrowed to 2.6% of GDP, while the primary balance posted a surplus of Rs. 3,468.7 billion, equivalent to 3% of GDP.
BISP, social protection
In terms of social protection, the government allocated Rs. 471 billion to the Benazir Income Support Program (BISP) in FY2025. The Benazir Kafaalat initiative disbursed Rs. 366.9 billion to 8.5 million families, while Benazir Taleemi Wazaif provided Rs. 55.4 billion to support the education of 7.96 million children. Additionally, Benazir Nashonuma extended Rs. 5.48 billion to benefit 0.7 million mothers and children.
Education
The government spent 0.8% of the GDP on the education sector in FY25, with the Economic Survey stating the literacy rate stands at 60.6%, comprising 68% men and 52.8% women. The number of universities in the country is 269, including 160 public. The government allocated a total of Rs. 61.1 billion for higher education.
Manufacturing and Mining
Overall manufacturing growth slowed to 1.3% in FY 2025, compared to 3.0% last year. This deceleration was primarily driven by a contraction of 1.5% in Large-Scale Manufacturing (LSM), compared to a modest growth of 0.9% in the previous year, the economic survey stated.
In contrast, small-scale manufacturing and slaughtering grew by 8.8% and 6.3%, respectively, providing some support to the sector. Meanwhile, the Mining and Quarrying sector continued to face difficulties, contracting by 3.4% in FY 2025.
Power Generation
According to the Economic Survey, the country has a total installed electricity generation capacity of 46,605MW, comprising 24.4% hydel, 55.7% thermal, 7.8% nuclear, and 12.5% renewables. It states that during July-March FY25, total electricity generation stood at 90,145GWh against consumption of 80,111GWh, with households accounting for 49.6%, industrial 26.3%, agriculture 5.7%, and commercial consumers 8.6%.
The total installed capacity includes over 2,800MW through solar net metering.
Fiscal Development
The fiscal consolidation efforts initiated in FY24 continued in FY25, reinforcing fiscal discipline. Effective consolidation measures helped to reduce the fiscal deficit to 2.6% of GDP during July-March FY 2025 from 3.7% last year. Provinces played a major role in supporting the fiscal consolidation efforts of the federal government by posting a significantly higher cumulative surplus of Rs. 1,053.3 billion during July-March FY 2025 against the surplus of Rs. 435.4 billion last year.
During his speech, the finance minister said the government would continue to focus on expanding the tax net in the coming fiscal year. He emphasized that he did not want the economy to expand too quickly, triggering a surge in imports. “Don’t get into a sugar rush,” he said. “Because the moment we go into a consumption-led growth, and our imports go haywire and our balance of payments problem intensifies, that sort of derails the entire discussion,” he added.