Pakistan Targets 4% GDP Growth and 8.2% Inflation for FY2026-27

Pakistan has established an economic growth target of 4% and an inflation target of 8.2% for the 2026-27 fiscal year. The macroeconomic framework was cleared on June 1, 2026, during a meeting of the Annual Plan Coordination Committee (APCC) and is scheduled for formal approval by the National Economic Council (NEC) on June 3, 2026.

The NEC serves as the highest national economic policy-making body in the country. It is led by the prime minister and includes representation from all four provincial chief ministers and several federal ministers.

The daylong APCC meeting was presided over by Planning Minister Ahsan Iqbal and attended by provincial development ministers and senior federal and provincial bureaucrats. The targets follow a period where the economy grew by 3.7% in the 2025-26 fiscal year, missing its target of 4.2% by half a percentage point.

According to the APCC working paper:

“For FY2026–27, Pakistan’s economy is targeted to grow by 4pc, signalling a continued growth trajectory,”

APCC working paper

Sectoral Growth Targets

The government aims for the commodity-producing sectors to expand by 3.9% in the coming fiscal year. This objective is driven by a projected 3.8% growth in agriculture and 4.5% growth in large-scale manufacturing (LSM).

Agricultural growth is expected to be supported by livestock performance at 3.9%, a recovery in important crops at 3.6% and cotton ginning at 2.5%.

The industrial sector is targeted to grow by 4% in FY2026-27. This growth is expected to stem from a revival in LSM as well as momentum in energy (gas and water supply), construction, and mining and quarrying.

The services sector has a growth target of 4.2%. This represents underpinned by specific targets for different sub-sectors:

• Information and communication: 7.7%
• Financial services: 4.5%
• Wholesale and retail trade: 4.2%
• Transport, storage, and communications: 3.7%

Investment and Savings Framework

The macroeconomic outlook for FY2026-27 targets national savings to grow to 14.3% of GDP, up from 14.1% in the current fiscal year. Total investment is targeted to reach 15% of GDP, compared to 14.4% in the current fiscal year.

The planning commission indicated that these figures reflect a narrowing savings-investment gap to be financed through modest external inflows. Public investment is targeted to remain steady at 3% of GDP, while private investment is projected to rise to 10.3% of GDP from 9.6% in the current fiscal year.

The inflation target of 8.2% is based on anticipated improved macroeconomic stability and supportive fiscal consolidation.

Employment Generation Goals

The APCC has set a target to increase employment by two million people in FY2026-27. This goal is based on the premise that public investment will crowd in private investment, expanding job opportunities across all sectors.

The planning commission expects these efforts to create jobs across three primary sectors:

• Services sector: 1.1 million jobs
• Industrial sector: 0.5 million jobs
• Agriculture sector: 0.4 million jobs

The commission stated that ongoing federal and provincial employment generation programs are strengthening technical skills, entrepreneurship, job-matching mechanisms, and labor market participation.

Economic Context and External Risks

The planning commission noted that the economy showed notable stabilization in the first eight months of the current fiscal year, despite the impact of the US-Iran war and flash floods.

During this period, large-scale manufacturing showed a sustained recovery after two years of contraction. This was supported by improved external sector conditions, rising services exports, and strong remittance inflows, which led to greater exchange rate stability and higher foreign exchange reserves.

However, external price shocks emerged following the outbreak of conflict in late February 2026. This caused global oil prices to surge from approximately $72 per barrel to a peak of nearly $120 per barrel.

These shocks impacted inflation. Average inflation from July to April FY2025-26 rose to 6.2%, compared to 4.7% during the same period the previous fiscal year. Monthly inflation in April 2026 reached 10.9%, a significant increase from 0.3% in April 2025.

Regarding the external sector, the planning commission warned that easing import controls and debt repayments could widen the current account deficit next year. The commission noted that these pressures may be cushioned by export recovery, strong remittance inflows, and anticipated external financing.

The planning commission cautioned that the targets for the next fiscal year are contingent on stable external conditions and effective macroeconomic management.