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XXVI. Economic Conditions of Pakistan (Latest Survey & Budgets)

📂 START HERE — How This Page Is Organised

No child pages here — read the sections below in order, then the past-paper MCQs at the end.

  • Subjective economy questions are solved on VII. Economic Challenges — revise both pages together.
  • This page holds the economic-fact MCQs (survey and budget figures).

📺 Directly Relevant YouTube Lecture Sources

📌 Topic Contents

  1. 📖 What This Topic Covers
  2. 📖 Pakistan Economic Survey 2025-26 (released 11 June 2026)
  3. 📖 Headline figures
  4. 📖 Sectoral performance
  5. 📖 Shocks that shaped FY26
  6. 📖 Federal Budget 2026-27 (presented 12 June 2026)
  7. 📖 Previous vs current budget (quick comparison)
  8. 📖 Answer Outline (20 marks)
  9. 📖 Exam angle
  10. 📖 How to Prepare (this topic is 100% current-affairs dependent)
  11. 📖 Key Structural Numbers to Always Know (approximate, verify each year)
  12. 📖 Budget-Specific Prep
  13. 📖 Study Approach
  14. 📖 Exam angle
  15. 📖 ✍️ Model Answer (20 marks)
  16. 📖 Outline

20-mark answer check: identify the exact command word, establish a clear position, support each argument with a dated example and evaluate competing evidence.

What This Topic Covers

  • Most recent Pakistan Economic Survey (released annually, day before Budget)
  • Previous & current Federal Budget — revenue/expenditure priorities, deficit targets
  • Sectoral performance: agriculture, industry, services

Pakistan Economic Survey 2025-26 (released 11 June 2026)

Headline figures

  • GDP growth: 3.7% (target 4.2%) — a four-year high. Trend: −0.2% (FY23) → 2.6% (FY24) → 3.2% (FY25) → 3.7% (FY26)
  • Size of economy: Rs126.9 trillion (~$452 billion) — largest ever
  • Per capita income: 1,901(upfrom1,901 (up from 1,751)
  • Inflation (CPI): ~6.2% average Jul–Apr FY26 — slightly higher than 4.7% a year earlier, but far below the 2023 crisis peak
  • Fiscal deficit: 0.7% of GDP (down from 2.6%); primary surplus maintained
  • FBR revenue: up 10.1%; FY26 collection ~Rs12.98 trillion (below the Rs14.13 trillion target)
  • Interest (markup) payments: fell 23% as policy rates came down
  • Current account: small surplus ($72 million, Jul–Mar FY26), driven by remittances
  • Remittances: record inflows, above $30 billion for the year
  • Forex reserves (SBP): record ~$21.4 billion by mid-September 2026
  • Poverty: 28.9% (2024-25), up from 21.9% (2018-19); Gini up from 28.4 to 32.7

Sectoral performance

  • Agriculture: grew 2.89% (1.53% last year); 23.4% of GDP, 33.1% of workforce. Wheat up 4.3% (29.6 million tonnes), sugarcane up 6.2%, rice up 2.8%; cotton down 0.5% (7.05 million bales), maize down 2.7% due to floods. Livestock grew 3.75%
  • Industry: Large-Scale Manufacturing grew 6.1%, highest in four years; broad-based (16 of 22 sectors). Cement sales +10%, car sales +31%
  • Services: 58% of GDP, grew 4.9% (highest in four years); ICT services +7.5%; IT/ICT exports ~$3.4 billion
  • Energy: installed capacity ~49,650 MW; mix 49% thermal, 23% hydel, 20% renewables, 7% nuclear. 13 IPPs (5,105 MW) closed as part of power-sector reform
  • Weak spots: food exports fell ~1.5billion(rice−1.5 billion (rice −1.1 billion); education spending ~0.8% of GDP; rising poverty

Shocks that shaped FY26

  • US tariff uncertainty (mid-2025), monsoon floods (Aug–Sep 2025), and the Middle East/Iran conflict from March 2026 (oil price spike)

Federal Budget 2026-27 (presented 12 June 2026)

  • Total outlay: Rs18.77 trillion (FY26 budget: Rs17.57 trillion)
  • Targets: GDP growth 4%, inflation 8.2%, fiscal deficit 3.6% of GDP, primary surplus 2% of GDP
  • FBR target: Rs15.26 trillion (~18% above FY26 actual collection); non-tax revenue Rs5.34 trillion
  • Debt servicing: ~Rs8.05 trillion — the single largest expense (over 40% of the outlay)
  • Defence: Rs3 trillion (up from Rs2.55 trillion), reflecting the post-2025 India standoff and regional tensions
  • Federal PSDP: Rs1 trillion; combined federal + provincial development ~Rs3.7 trillion
  • BISP: Rs838 billion (up from ~Rs716 billion)
  • Relief measures: 7% raise in salaries and pensions; income-tax relief for salaried class; super tax abolished for six sectors; incentives for exports, IT and property
  • IMF link: framed under the IMF Extended Fund Facility — fiscal consolidation, tax-base broadening, energy subsidy reform

Previous vs current budget (quick comparison)

  • Outlay: Rs17.57tr (FY26) → Rs18.77tr (FY27)
  • FBR target: Rs14.13tr → Rs15.26tr
  • Defence: Rs2.55tr → Rs3.0tr
  • BISP: ~Rs716bn → Rs838bn
  • Federal PSDP: Rs1tr → Rs1tr

Answer Outline (20 marks)

  1. Introduction — headline figures (GDP 3.7%, $452 billion economy) and thesis (stabilisation without broad-based growth).
  2. Macroeconomic indicators — growth, inflation, fiscal, external account, reserves.
  3. Sectoral performance — agriculture, industry (LSM), services, IT, energy.
  4. Previous vs current budget — comparison table.
  5. Critical analysis — debt servicing and defence share, tax burden, social spending, IMF link.
  6. Problems of major sectors.
  7. Recommendations.
  8. Conclusion.

Exam angle

  • Critique point: macro stabilization (low deficit, record reserves, LSM recovery) has not reached households — poverty rose to 28.9%, education spending collapsed, and growth is still too slow to absorb the youth bulge.
  • Structural issues to mention: debt servicing plus defence consume well over half the budget, leaving little room for development; tax-to-GDP remains low; exports remain narrow (textiles-heavy).

How to Prepare (this topic is 100% current-affairs dependent)

  • Update every few months — figures change with each Economic Survey/Budget cycle
  • Track: GDP growth rate, inflation (CPI), fiscal deficit %, current account balance, tax collection (FBR target vs actual), forex reserves, remittances
  • Sectoral breakdown: agriculture growth %, large-scale manufacturing (LSM) trends, services sector contribution

Key Structural Numbers to Always Know (approximate, verify each year)

  • Tax-to-GDP ratio (~9-10%, target higher under IMF program)
  • GDP composition (FY26): Services ~58%, Agriculture ~23.4%, Industry ~18-19%
  • Major export: textiles (~55-60% of total exports)
  • External debt as % of GDP — closely watched IMF benchmark

Budget-Specific Prep

  • Know current fiscal year's budget priorities: defence, debt servicing, subsidies (esp. energy), development (PSDP)
  • Note IMF program conditions tied to budget (tax measures, subsidy reforms, SOE reform)
  • Track any new taxes, sector-specific relief/support measures announced

Study Approach

  • Do NOT rely on static notes for this topic — pull the latest Economic Survey (finance.gov.pk) and latest Budget speech highlights closer to your exam date
  • Cross-check figures against State Bank of Pakistan (SBP) monetary policy statements for most current data

Exam angle

  • Examiners expect the latest figures.
  • Re-check every number a few weeks before the exam.

✍️ Model Answer (20 marks)

Question: In the light of the latest Economic Survey and the previous and current federal budgets, evaluate Pakistan's economic conditions and the performance of its major sectors.

Outline

  1. Introduction
  2. Macroeconomic indicators (Economic Survey 2025-26)
  3. Sectoral performance
  4. Previous vs current budget
  5. Critical analysis
  6. Problems of the major sectors
  7. Recommendations
  8. Conclusion

1. Introduction

The Pakistan Economic Survey 2025-26, released on 11 June 2026, describes an economy that has stabilised after the near-default of 2023. GDP grew 3.7%, the economy reached a record size of about 452billion,andpercapitaincomeroseto452 billion, and per capita income rose to 1,901. The next day, the government presented a Rs18.77 trillion budget for FY27, targeting 4% growth. Beneath the headlines, however, poverty has risen and investment in people has fallen. Pakistan has achieved stabilisation without broad-based growth.

2. Macroeconomic Indicators

  • GDP growth: 3.7% in FY26, missing the 4.2% target but the highest in four years (−0.2% in FY23, 2.6% in FY24, 3.2% in FY25).
  • Economy: Rs126.9 trillion (about 452billion);percapitaincome452 billion); per capita income 1,901.
  • Inflation: about 6.2% on average in July–April FY26.
  • Fiscal deficit: 0.7% of GDP (from 2.6%); primary surplus maintained.
  • FBR revenue: up 10.1%, but below target.
  • External: a small current account surplus (July–March), record remittances above 30billion,reservesofabout30 billion, reserves of about 21.4 billion (September 2026).
  • Poverty: 28.9% (2024-25), up from 21.9% in 2018-19.

3. Sectoral Performance

  • Agriculture (23.4% of GDP, 33.1% of employment): grew 2.89%, despite the 2025 floods. Wheat was up 4.3% (29.6 million tonnes), sugarcane up 6.2% and rice up 2.8%, while cotton fell 0.5% and maize 2.7%. Livestock grew 3.75%.
  • Industry: Large-Scale Manufacturing grew 6.1%, the fastest in four years and broad-based (16 of 22 sectors); cement sales rose 10% and car sales 31%.
  • Services (58% of GDP): grew 4.9%; information and communication grew 7.5%; IT exports reached about $3.4 billion.
  • Energy: capacity of about 49,650 MW; 20% of electricity from renewables; 13 IPPs closed.

4. Previous vs Current Budget

  • Outlay: Rs17.57 trillion (FY26) to Rs18.77 trillion (FY27).
  • FBR target: Rs14.13 trillion to Rs15.26 trillion.
  • Defence: Rs2.55 trillion to Rs3.0 trillion.
  • BISP: about Rs716 billion to Rs838 billion.
  • Federal development (PSDP): Rs1 trillion in both years.
  • FY27 targets: growth 4%, inflation 8.2%, fiscal deficit 3.6% of GDP, primary surplus 2%.
  • Relief measures: a 7% raise in salaries and pensions, tax relief for the salaried class, and super tax abolished for six sectors.

5. Critical Analysis

Strengths

  • Fiscal consolidation and a primary surplus.
  • Record reserves and remittances; inflation down from crisis levels.
  • A recovery in manufacturing and strong IT growth.
  • Higher social protection through BISP.

Weaknesses

  • Debt servicing (about Rs8.05 trillion) and defence (Rs3 trillion) together consume well over half the budget, leaving little for development.
  • Growth remains too slow to absorb the youth bulge or reduce poverty.
  • Tax burden falls on the salaried and on indirect taxes; the FBR target requires about 18% growth over actual FY26 collection.
  • Education spending has fallen to about 0.8% of GDP.
  • Exports remain narrow; food exports fell.
  • External risks: the 2026 Iran war and oil prices, US tariffs, and dependence on the IMF.
  • Budget realism: projected inflation of 8.2% suggests renewed price pressure.

6. Problems of the Major Sectors

  • Agriculture: low yields, water scarcity, climate vulnerability, declining cotton.
  • Industry: high energy costs, low investment, informality.
  • Services: largely informal and low-productivity outside IT and telecoms.
  • Energy: circular debt and high tariffs.

7. Recommendations

  1. Broaden the tax base to retail, real estate and agriculture instead of overburdening salaried workers.
  2. Reduce debt servicing through primary surpluses, debt reprofiling and lower interest rates.
  3. Protect development, education and health spending.
  4. Pursue an export strategy for IT, value-added textiles, agriculture and minerals.
  5. Undertake energy reform to lower costs for industry.
  6. Invest in agricultural productivity and climate resilience.
  7. Maintain policy continuity through a Charter of Economy.

8. Conclusion

The latest Economic Survey and budget show an economy that has regained balance but not momentum. Pakistan has fixed the symptoms of crisis (deficits, reserves, inflation) without yet fixing its structure. Unless the next phase shifts resources from debt and consumption toward investment in people, productivity and exports, today's stability will remain fragile and growth will remain too slow to lift the 28.9% of Pakistanis living in poverty.

📝 CSS Past Papers 2014–2026 — This Chapter (Solved)

📊

Asked so far: subjective economy questions are under VII. Economic Challenges · 7 economic-fact MCQs here (2019 ×2, 2020, 2025, 2026 ×3). These MCQs test figures from the latest Economic Survey and budget, so check the numbers again every June.

2024–2026 MCQs are from the FPSC papers with original options. 2014–2023 MCQs come from published answer keys (the FPSC copies only contain Part-II), so their options are rewritten but the keyed answer is kept and checked.

Part-I — Past MCQs

1. (CSS 2019) The World Bank's figure for Pakistan's GDP growth in 2017-18 was:

  • (A) 4.5%
  • (B) 5.2%
  • (C) 5.5%
  • (D) 5.8%
  • ✅ (C) 5.5% as keyed.
    • ⚠️ The official Economic Survey figure was 5.8%, later revised to 5.5% — check whether the question asks for the World Bank or the official figure.

2. (CSS 2019) The total outlay of the federal budget for FY 2017-18 was:

  • (A) Rs 4.2 trillion
  • (B) Rs 4.75 trillion
  • (C) Rs 5.1 trillion
  • (D) Rs 5.9 trillion
  • ✅ (B) Rs 4.75 trillion (Rs 4,753 billion) — presented by Ishaq Dar; the first budget above Rs 4.5 trillion.

3. (CSS 2020) Pakistan's GDP growth rate for FY 2018-19 was:

  • (A) 5.5%
  • (B) 3.3%
  • (C) 2.9%
  • (D) 1.9%
  • ✅ (C) 2.9% as keyed.
    • ⚠️ Provisional estimate was 3.3%, later revised to about 2% — the key point is the sharp slowdown after the 2018–19 balance-of-payments crisis.

4. (CSS 2025) The second Five-Year Plan in Pakistan was introduced in:

  • (A) 1957
  • (B) 1958
  • (C) 1960
  • (D) None of these
  • ✅ (C) 1960 — Second Plan 1960–65 under Ayub, the most successful (about 6% growth).
    • First Plan 1955–60; Third Plan 1965–70.
    • Current: 13th Plan (2024–29), linked to Uraan Pakistan.

5. (CSS 2026) Pakistan joined the International Monetary Fund (IMF) in:

  • (A) 1956
  • (B) 1973
  • (C) 1981
  • (D) None of these
  • ✅ (D) None of these — Pakistan joined the IMF and World Bank on 11 July 1950.
    • First IMF programme: Stand-By Arrangement, 1958.
    • Latest: 37-month EFF of about $7 billion, approved September 2024.

6. (CSS 2026) Which sector is projected to be the primary driver of Pakistan's GDP growth under the latest 5-year plan (2024–29)?

  • (A) Agriculture only
  • (B) Heavy manufacturing
  • (C) Services sector
  • (D) None of these
  • ⚠️ Disputed — most keys give (C) Services sector.
    • 13th Plan targets: industry 4.8% → 6.9% by FY29, agriculture 5.1%, services about 6.2%.
    • Services are the largest share of GDP (about 58%).
    • "Agriculture only" and "Heavy manufacturing" are clearly wrong.

7. (CSS 2026) Which of the following is NOT included in the "5Es Framework to Turnaround Pakistan"?

  • (A) Equity & empowerment
  • (B) Environment
  • (C) E-Pakistan
  • (D) Efficiency
  • ✅ (D) Efficiency — the 5Es of Uraan Pakistan (31 Dec 2024): Exports, E-Pakistan, Environment, Energy and Infrastructure, Equity and Empowerment.

🧠 Additional Practice Questions — Not Actual FPSC Past Papers

  • "In the light of the latest Economic Survey, evaluate the performance of the major sectors of Pakistan's economy."
  • "Critically analyse the current federal budget. Is it growth-oriented or IMF-driven?"