Pakistan Sets 4pc Growth Target for FY27 in New Economic Plan

Pakistan has set a 4 percent economic growth target for fiscal year 2026–27 as the government moves its new macroeconomic framework toward final approval by the National Economic Council. The framework was cleared on Monday during a meeting of the Annual Plan Coordination Committee in Islamabad.

The proposed growth target follows a year in which Pakistan recorded 3.7 percent growth, missing the earlier target by half a percentage point. The new plan will now be placed before the NEC on June 3, where the prime minister, provincial chief ministers and federal ministers are expected to review and approve the national economic direction for the next fiscal year.

According to the framework, the government is aiming to lift growth across agriculture, industry and services while keeping inflation at 8.2 percent. The commodity-producing sectors are targeted to expand by 3.9 percent, supported by a projected 3.8 percent increase in agriculture and 4.5 percent growth in large-scale manufacturing.

The industrial sector is expected to grow by 4 percent, with officials linking the target to recovery in manufacturing, mining, construction and energy-related activity. The services sector has been assigned a 4.2 percent growth target, backed by expected improvement in wholesale and retail trade, transport, communications, finance and information services.

Planning officials cautioned that these targets depend on steady macroeconomic management and stable external conditions. The framework also warns that Pakistan’s external sector may face pressure if import controls ease further and debt repayments rise during the next fiscal year.

The plan sets national savings at 14.3 percent of GDP and investment at 15 percent of GDP, showing a modest improvement from the outgoing fiscal year. Private investment is expected to rise to 10.3 percent of GDP, while public investment is projected to remain around 3 percent of GDP.

Employment creation has also been included as a major policy objective. The APCC framework estimates that around two million jobs could be generated in FY2026–27, including 1.1 million in the services sector, half a million in industry and 400,000 in agriculture.

The latest economic plan comes after Pakistan’s economy showed signs of stabilisation in the first eight months of the outgoing fiscal year despite floods and external shocks linked to the US-Iran conflict. Officials pointed to stronger remittances, services exports, higher reserves and exchange-rate stability as factors that helped restore investor confidence.

However, the framework also acknowledges risks from inflation and global oil prices. Monthly inflation rose sharply in April 2026, while oil market volatility following regional conflict created renewed pressure on prices, imports and household costs.

The final decision will rest with the National Economic Council, which is expected to consider the framework on June 3. If approved, the targets will shape Pakistan’s next budget cycle and determine how the government balances growth, inflation control, job creation, debt obligations and external financing needs.