Pakistan has recorded a substantial rise in remittances but a worrying decline in foreign investment during September, the Finance Division’s Monthly Economic Review for October 2025 revealed on Tuesday.
According to the report, remittances grew by 11.3% compared to the same month last year, while foreign direct investment (FDI) fell by 55.5%, dropping from $417.4 million in September 2024 to $185.6 million in September 2025. Overall foreign investment decreased by 64.5%.
The report noted that the inflation rate is expected to remain between 5% and 6% in October, as recent floods and temporary border closures have increased pressure on the prices of some essential goods. The government reaffirmed its commitment to maintaining fiscal discipline, keeping inflation within target, and providing social protection to vulnerable segments of society.
Preliminary estimates indicate that the recent floods caused agricultural losses of Rs430 billion, affecting crops such as rice, cotton, sugarcane, maize, fodder, and vegetables. However, recovery efforts are underway through increased agricultural credit, higher imports of farm machinery, and better use of fertilizers.
The report highlighted that large-scale manufacturing (LSM) grew by 4.4% during July–August FY2026, while inflation rose to 5.6% in September, compared to 3% in August. Average inflation during July–September stood at 4.2%, significantly lower than 9.2% recorded during the same period last year.
Federal revenues showed remarkable improvement, surging by 231% to reach Rs3,269 billion. Non-tax revenues grew by 721%, mainly due to higher profits from the State Bank of Pakistan, petroleum levy, gas cess, and defense receipts. Expenditures rose by only 7.6%, resulting in a federal fiscal surplus of Rs1,509 billion, compared to a deficit of Rs648 billion last year.
The current account recorded a deficit of $594 million during July–September; however, a surplus of $110 million was noted in September alone. Exports increased by 6.5%, while imports rose by 8.3%. Remittances climbed by 8.4% to $9.5 billion, with Saudi Arabia contributing 24.2% and the United Arab Emirates 20.8% of the total inflows.
