Pakistan’s ambitious economic growth target for the current fiscal year has come under pressure due to devastating floods, Finance Minister Muhammad Aurangzeb acknowledged in a recent interview with Chinese media. While expressing confidence over the country’s improving economic indicators, he admitted that achieving growth of over 4 percent — the official target — is now uncertain.
Aurangzeb explained that Pakistan had set a strong recovery plan after a turbulent economic period marked by inflationary pressure and currency depreciation. But the unexpected climatic disaster has disrupted that trajectory. “The flood impact could slow things down,” he said, though he remains hopeful that the nation can still secure around 3.5 percent GDP growth by the end of the fiscal year.
Economic Stabilization Gains Praised Internationally
The finance minister highlighted what he called “significant achievements” in stabilizing the national economy over the past year. These include:
- Improvement in foreign exchange reserves, providing import cover for nearly two and a half months
- Sharp decline in inflation, which he noted has fallen back into the single-digit range
- Lower policy interest rates, easing financial pressure on businesses and borrowers
- Recognition from the global financial community, including favorable assessments by International Monetary Fund officials during ongoing engagements
Aurangzeb said these accomplishments reflect the government’s commitment to reforms, adding that three major international credit rating agencies have improved Pakistan’s rating outlook after several years of downgrades.
“These upgrades show international confidence in Pakistan’s recovery plan,” he emphasized, arguing that global markets are beginning to respond positively as stability returns.
Floods Create New Economic Challenges
However, the minister cautioned that the recent floods — affecting key agricultural and industrial zones — have strained both output and infrastructure recovery efforts.
Agriculture, which contributes around 23 percent to national GDP and employs more than one-third of Pakistan’s workforce, has suffered the most. Flood damage to farms and irrigation networks is expected to raise production costs and reduce crop volumes, especially for wheat, cotton, and fodder. This disruption could also leave ripple effects on the textile sector, Pakistan’s biggest export driver.
Economic experts earlier predicted that agriculture and related supply chain activities would play a decisive role in meeting the 4 percent target. But with millions of people impacted and essential systems strained, growth projections are being reassessed.
Trade, Investment & CPEC Phase-II
In the same interview, Aurangzeb emphasized that China-Pakistan Economic Corridor (CPEC) continues to anchor Pakistan’s long-term development strategy. He confirmed major progress in the second phase, which focuses not just on infrastructure but:
- Industrial cooperation
- Agricultural modernization
- Energy transition
- Technology and digital innovation
He disclosed that new investment opportunities are actively being discussed with Chinese partners, particularly in renewable energy and special economic zones. Pakistan, he said, is seeking to accelerate value-added production and boost exports to strengthen its external account sustainability.
“These initiatives are aimed at creating jobs and ensuring Pakistan’s economy is more resilient against future shocks,” he added.
