ISLAMABAD – Pakistan has failed to achieve two key macroeconomic targets during the current fiscal year, as both the investment and savings ratios remained below official projections, according to provisional data compiled by the Planning Ministry based on National Accounts figures.
The investment-to-GDP ratio remained unchanged at 14.4 percent, matching last year’s level but falling short of the government’s 14.7 percent target. Despite policy efforts aimed at attracting non-debt-creating inflows and foreign direct investment, overall investment activity showed little improvement.
Officials noted that export performance weakened by more than six percent during the first ten months of the fiscal year, while the government continued to rely heavily on borrowing to meet financing needs. Internal discussions are underway on whether to proceed with the second phase of trade liberalisation from July, following concerns that the earlier phase increased imports without delivering export growth.
The Sovereign Wealth Fund, launched three years ago to attract foreign investment, also remained inactive during the year due to regulatory concerns raised by the International Monetary Fund (IMF).
The government has since introduced legislation in the National Assembly to address these objections, while a Senate committee deferred action on the bill during its latest meeting.
Meanwhile, the Special Investment Facilitation Council (SIFC) has not succeeded in generating significant new foreign investment, although it has worked to ease procedural hurdles for domestic investors.
Fixed investment as a share of GDP also remained below target at 12.7 percent against the planned 13 percent. Private sector investment rose slightly to 9.6 percent, missing the 9.8 percent target, while public sector investment declined to 3.1 percent due to a reduction of nearly Rs200 billion in the federal development budget.
For the next fiscal year, the government has proposed a development allocation of Rs1.126 trillion, though actual spending will depend on revenue performance.
Analysts say the shortfall in investment limits the government’s ability to finance infrastructure and social sector development, increasing dependence on external and domestic borrowing.
Separately, Finance Minister Muhammad Aurangzeb is in China seeking a $250 million loan through Chinese debt markets, backed by guarantees from the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), as Pakistan’s sovereign credit rating remains insufficient for direct market access.
The savings-to-GDP ratio also declined to 14 percent, below the 14.3 percent target and lower than last year’s level, largely due to pressures from the expected current account deficit.
Overall, provisional estimates indicate that Pakistan has missed all three major macroeconomic targets this fiscal year—growth, investment, and savings—raising concerns about the economy’s capacity to sustain higher expansion and job creation. The economy grew by 3.7 percent during the year, a pace considered insufficient to absorb new entrants into the labour market.
Demographic projections cited in recent reports suggest Pakistan’s population could rise by 62 percent to 389 million by 2050, with more than 255 million expected to be of working age.
Sector-wise data shows mixed investment trends. Private investment increased in agriculture by 8.7 percent due to imported machinery and livestock, while small-scale activity rose 25 percent. Investment in utilities such as electricity, gas, and water grew by 7.6 percent. The construction sector recorded an unusually sharp rise of over 60 percent despite an overall slowdown in activity.
Investment also increased in hotels and restaurants by 12.8 percent, transport and storage by 6.2 percent, and information and communication by 110 percent.
On the public sector side, manufacturing investment surged 97 percent due to the National Radio Telecommunication Corporation, while mining grew 25.9 percent on the back of Oil and Gas Development Company Limited (OGDCL) activity.
Growth was also recorded in utilities, transport, construction development authorities, and communication-related spending, including spectrum auctions and telecom investments.
