Pakistan failed to achieve two major economic targets during the current fiscal year as investment remained stagnant and national savings declined further despite continued efforts to attract foreign capital and stimulate economic activity.
According to provisional figures prepared by the Planning Ministry based on National Accounts data, the investment to GDP ratio remained unchanged at 14.4 percent during FY2025-26, missing the official target of 14.7 percent.
The savings to GDP ratio also fell to 14 percent, below the government’s target of 14.3 percent.
The government has struggled to attract significant non-debt-creating foreign investment and continues relying heavily on external borrowing to meet financing requirements. Exports also declined by more than 6 percent during the first 10 months of this fiscal year.
The federal government has also started internal discussions on whether to fully implement the second phase of trade liberalization from July, after the first phase reportedly accelerated imports without delivering meaningful export growth.
Meanwhile, the Special Investment Facilitation Council was unable to bring major foreign investment despite efforts to ease procedural bottlenecks for investors.
Fixed investment remained stuck at 12.7 percent of GDP, below the 13 percent target set in the federal budget.
Private sector investment edged up to 9.6 percent of GDP but still missed the official 9.8 percent target.
Public sector investment declined to 3.1 percent of GDP after the federal development budget was reduced by nearly Rs. 200 billion. For the next fiscal year, the government has proposed a Rs. 1.126 trillion development budget, although actual spending will depend on revenue collection performance.
The weak investment performance comes as Pakistan also missed its annual economic growth target. The economy expanded by 3.7 percent during the fiscal year, a pace considered insufficient to absorb the growing number of young people entering the labor market.
A recent report estimates Pakistan’s population could rise by 62 percent to 389 million by 2050, including 255 million people of working age.
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