Planning Minister Ahsan Iqbal on Monday warned the Middle East conflict is a major external shock for economies the world over, as he maintained the government had adopted a balanced and proactive approach to manage the resulting energy price volatility.
Addressing a virtual press conference at the launch of his ministry’s Monthly Development Report, he said that Pakistan’s economy had demonstrated notable stability during the first eight months of FY26 despite challenging global conditions. Inflation has declined to 5.5%, while economic activity has improved significantly, with growth rising to 3.8% in the first half compared to 1.9% last year, he claimed, adding this reflects better performance in both external and fiscal sectors, supported by ongoing reforms and prudent economic management.
On the Iran war, he noted that the International Monetary Fund (IMF) had revised global growth projections downward to 3.1% compared to the pre-war estimate of 3.3%, while global headline inflation was expected to hit 4.4% from 3.8%. He warned the conflict poses significant risks for Pakistan’s economy through higher global oil prices, increased import bills, inflationary pressures, and vulnerabilities in the external sector including exports and remittances.
Iqbal noted that Pakistan is also facing domestic inflationary pressures, with average inflation rising to 5.7% during July–March FY26 compared to 5.3% last year. Monthly inflation in March increased sharply to 7.3% from 0.7% in the same month last year, he said, primarily driven by non-food components, especially energy costs linked to global oil price shocks and tariff adjustments. Food inflation, he said, has remained relatively contained.
The minister acknowledged the government had taken difficult decisions, including hiking petrol and diesel prices. However, he noted, it had absorbed a fiscal burden of Rs. 129 billion to shield citizens from the full impact of global oil prices. Nevertheless, he said, the government had passed on all global reductions to the public and halved the petroleum development levy on petrol. He claimed these measures reflected the government’s commitment to protecting citizens from global price volatility while safeguarding purchasing power.
Iqbal also highlighted Pakistan’s proactive diplomatic engagement in the Middle East conflict, noting Islamabad leveraged its balanced relations with the United States and Iran to emerge as a credible mediator contributing to de-escalation efforts and regional stability. This initiative, he said, had also helped ease geopolitical tensions, which has had a positive impact on global oil prices.
According to the minister, large-scale manufacturing recorded a strong recovery of 5.9% growth during July–February FY26, with 15 out of 22 sectors showing positive performance, including automobiles, textiles, food, tobacco, apparel, and non-metallic minerals. He further noted FBR revenues reached Rs. 9.3 trillion during July–March FY25, reflecting a 10.1% increase, supported by improved enforcement and administrative reforms.
He said remittances remained strong at $30.3 billion, growing by 8.2%, while exports of goods and services reached $30.6 billion during July–March FY26. Services exports grew significantly by 17% to $7.3 billion, resulting in a 7% reduction in the services deficit. The current account also showed resilience, posting a surplus of $1.07 billion in March 2026, although the cumulative surplus for July–March stood at $8 million compared to $1.67 billion last year.
On fiscal and development performance, Iqbal said PSDP utilization reached 42% (Rs. 415 billion), higher than last year’s 36.4%, reflecting increased development activity. The CDWP approved seven projects and referred four to ECNEC, which are expected to generate thousands of direct and indirect employment opportunities. He further highlighted that Rs. 10.5 billion were saved through improved cost rationalization, reflecting enhanced efficiency in project planning.
Iqbal also underscored major development initiatives including the Jinnah Medical Complex and Research Center, a flagship 1,000-bed healthcare project aimed at strengthening healthcare delivery and reducing medical tourism. He emphasized the government’s focus on human capital development under Pakistan–China A.I. cooperation, with the Higher Education Commission tasked to align scholarships with emerging fields such as artificial intelligence, robotics, and Industry 4.0 to prepare youth for future economies.
He further highlighted international development cooperation, including engagement with the Islamic Development Bank for financing support under MCPS 2026–30, strengthened climate cooperation with China under CPEC 2.0, formalization of outcomes from the 14th Joint Cooperation Committee, and Pakistan–Türkiye knowledge sharing initiatives in key socio-economic sectors.
Concluding the briefing, the minister said that despite global uncertainty, Pakistan is moving towards economic stabilization through disciplined reforms, prudent fiscal management, strategic diplomacy, and sustained development efforts aimed at long-term growth and prosperity.