ISLAMABAD: Pakistan’s monetary policy is expected to remain cautious despite signs of economic stabilisation, as inflationary pressures, global commodity volatility, and external risks continue to influence the country’s economic outlook, according to S&P Global Market Intelligence.
The global financial research firm said the State Bank of Pakistan (SBP) is likely to maintain a careful policy approach after keeping the key policy rate unchanged at 11.5% during its July 2026 Monetary Policy Committee meeting.
Ahmad Mobeen, Principal Economist at S&P Global Market Intelligence, said the decision to maintain the policy rate reflects a more stable macroeconomic environment, supported by easing external pressures, improving economic activity indicators, and stronger business sentiment.
However, he noted that risks remain elevated as inflation continues to stay above the central bank’s target range. He added that renewed tensions in the Middle East, fluctuations in global commodity prices, and the possibility of a severe El Niño weather event could create additional challenges for Pakistan’s economic outlook.
“Policy discipline will remain critical as external buffers improve, but repayment obligations and continued reliance on official financing and rollovers continue to pose challenges,” Mobeen said.
Pakistan GDP Growth Forecast at 3.5%
S&P Global Market Intelligence has projected Pakistan’s real gross domestic product (GDP) growth at 3.5% for fiscal year 2027, citing improving economic fundamentals and gradual recovery in economic activity.
Despite the positive outlook, the firm warned that downside risks remain, particularly from external shocks, commodity price instability, and potential climate-related disruptions linked to severe weather patterns.
Foreign Reserves Expected to Reach $19.5 Billion
The research firm expects Pakistan’s external sector to strengthen further, supported by strong remittance inflows and planned official financing arrangements.
According to S&P Global Market Intelligence projections, Pakistan’s foreign exchange reserves are expected to rise to $19.5 billion by December 2026.
The country’s current account deficit is projected at 0.7% of GDP in calendar year 2026 and 0.9% of GDP in 2027, indicating continued improvement in external account management.
Economists believe Pakistan’s economic recovery will depend heavily on maintaining fiscal and monetary discipline, controlling inflation, improving external stability, and managing global risks effectively.
