The presentation of the Monthly Development Report for January 2026 by Ahsan Iqbal, the Federal Minister for Planning, provides a cautiously optimistic view of Pakistan’s economy amidst a prolonged period of fragile confidence. The data he provided including enhanced GDP growth and reduced inflation imply that the economy might finally be stabilising after years of turmoil from floods, global inflation, energy crises, and inconsistent internal policies. However, although the signs are encouraging, the longevity of this recovery hinges on a commitment to intensifying reforms rather than easing them.
The reported GDP growth of 3.7 per cent in the first quarter of FY2026, compared with 1.6 per cent a year earlier, reflects a welcome turnaround. Particularly encouraging is industrial growth of 9.4 per cent, alongside the recovery of large-scale manufacturing after a two-year decline. This rebound indicates that stabilisation policies introduced in late 2025 are beginning to restore business confidence. However, growth driven largely by short-term stabilisation must now transition into productivity-led expansion if it is to be durable.
Inflation figures present another bright spot. A reduction to around 5.2 per cent during July–December 2025 has brought significant relief to households battered by high prices over recent years. Improved availability of food items has played a role, but inflation control will remain fragile unless energy costs and structural inefficiencies are addressed. The government’s acknowledgment that energy sector reform is unavoidable is therefore timely and necessary.
Fiscal performance, particularly tax collection of Rs 6.2 trillion with a 10 percent increase, signals progress toward fiscal discipline. Yet Pakistan’s tax base remains narrow, and........

© The Patriot