## Pakistan's Economy Breaks Through $400 Billion GDP Barrier in FY25

Pakistan's economy has achieved a historic milestone, with nominal GDP in dollars reaching $411 billion—equivalent to Rs114.7 trillion—for the first time in FY25, according to the National Accounts Committee. This breakthrough represents an important step toward the nation's ambitious goal of attaining a $1 trillion GDP by FY2035.

### Growth Performance Falls Short of Projections

The expansion, however, faced headwinds. Pakistan's GDP growth rate came in at 2.68% for the fiscal year, missing the more optimistic 3.6% target that had been set. While this may seem underwhelming in isolation, context matters: the economy has maintained a steady 9.3% compound annual growth rate (CAGR) in nominal GDP terms over the past five years, signaling underlying resilience. Analysts, including Topline Securities CEO Sohail Mohammed, have characterized this as a "notable recovery" despite the year-on-year deceleration.

### Sectoral Divergence Highlights Structural Challenges

The growth narrative becomes more complex when examining individual sectors. Agriculture posted modest expansion of 1.18%, while the industrial sector contracted by 1.14%—a concerning sign that suggests uneven economic momentum across key productive segments. This divergence underscores the challenges Pakistan faces in achieving balanced, broad-based economic growth.

### Monetary Policy Response to Inflation Improvement

In response to improving inflation dynamics, the State Bank of Pakistan (SBP) has reduced its policy rate to 11%, signaling a gradual shift toward accommodative monetary conditions. This rate adjustment reflects confidence in cooling price pressures and aims to support continued economic activity.

### Long-Term Vision Amid Near-Term Challenges

Pakistan's pathway to a $1 trillion GDP by FY2035 hinges on sustained structural reforms and macroeconomic stability. With nominal growth acceleration and sectoral rebalancing as critical priorities, policymakers face the dual challenge of maintaining momentum while addressing industrial sector weakness.