Recent economic outcomes

Pakistan’s economy has faced severe strain since the Middle East war disrupted shipping in the Strait of Hormuz, causing Brent Crude Oil prices to jump from USD 70 per barrel in February to over USD 101 by late April. The conflict has slashed exports of LNG, LPG, and fertilizers while pushing up transport costs, inflating both imported and domestically produced goods. Inflation in Pakistan hit 10.9% year-over-year in April 2026, up from 7% in February, as motor fuel prices rose by over 40% and transport service charges climbed nearly 38%. Non-food prices surged 14%, with electricity charges up 34%, gas charges up 23%, and liquid hydrocarbons soaring 63%, though food inflation remained relatively moderate at 7%. The weekly inflation rate for the week ending May 7, 2026, reached 15.2%, more than triple the 4% recorded in late February. The trade deficit ballooned to USD 4.1 billion in April, a 40% increase from February, as imports surged 29% (USD 1.5 billion) while exports grew only marginally. With the annual current account deficit projected to rise from USD 2.4 billion to nearly USD 7 billion by June 2026, economic pressures are mounting. Remittances from Saudi Arabia and the UAE, which account for over half of inflows, dropped 5% in March, raising concerns of further declines. Foreign exchange reserves fell over 3% from USD 16.4 billion in March to USD 15.8 billion by April 24, 2024, though deposits from Saudi Arabia offset some losses from UAE time deposits. Manufacturing output showed mixed trends, with an 11% year-over-year increase in March but a 5% month-over-month decline, reflecting uncertainty tied to ongoing geopolitical tensions. The Pakistan Bureau of Statistics (PBS) and State Bank of Pakistan (SBP) have yet to release full April 2026 data, leaving key economic variables—such as tax revenues and remittance trends—unclear. The war’s ripple effects, including reduced global trade flows and soaring energy costs, continue to test Pakistan’s economic resilience.