Govt sets economic growth target at 4pc, inflation at 8.2pc for next fiscal year

The government has set an economic growth target of 4 per cent for the next fiscal year, along with an inflation target of 8.2pc, after missing its previous growth goal by a narrow margin.

According to official documents, the economy recorded 3.7pc growth in the current fiscal year, slightly below the target of 4.2pc. In the year before that, growth stood at 3.2pc.

The macroeconomic framework for FY2026-27 was approved on Monday during a meeting of the Annual Plan Coordination Committee (APCC). The plan will now be presented to the National Economic Council (NEC) for final approval on June 3.

The NEC, the country’s top economic decision-making forum, is headed by the prime minister and includes the chief ministers of all four provinces along with federal ministers.

The day-long APCC meeting was chaired by Planning Minister Ahsan Iqbal and attended by provincial development ministers as well as senior officials from both federal and provincial governments.

The APCC working paper states that Pakistan’s economy is expected to grow by 4pc in FY2026-27, indicating what it called a “continued growth trajectory.” For the coming fiscal year, the commodity-producing sector is projected to grow by 3.9pc. This includes 3.8pc growth in agriculture and 4.5pc growth in large-scale manufacturing.

Agriculture is expected to benefit from improved output in key crops, estimated at 3.6pc, along with cotton ginning growth of 2.5pc. Livestock is also projected to perform strongly with 3.9pc growth.
The industrial sector is targeted to expand by 4pc, supported mainly by a recovery in large-scale manufacturing as well as growth in mining, construction, and energy-related services.

The services sector is projected to grow by 4.2pc, driven by gains in wholesale and retail trade, transport and communications, financial services, and the information and communication sector, which is expected to grow by 7.7pc.

However, the planning commission cautioned that these projections depend on effective macroeconomic management and stable external conditions.

On the savings and investment side, national savings are expected to rise to 14.3pc of GDP, compared to 14.1pc in the current fiscal year. Total investment is projected at 15pc of GDP, up from 14.4pc.
The report notes that the gap between savings and investment is expected to narrow and will be financed through limited external inflows.

Public investment is projected to remain steady at 3pc of GDP, while private investment is expected to increase to 10.3pc from 9.6pc in the current fiscal year.

Inflation is projected to remain at 8.2pc, supported by expected fiscal discipline and improved macroeconomic stability.