S&P Global Market Intelligence expects the State Bank of Pakistan (SBP) to maintain a cautious monetary policy stance due to persistently high inflation and external risks.
Commenting on the SBP’s decision to leave the policy rate unchanged at 11.5 percent in July, Ahmad Mobeen, Principal Economist at S&P Global Market Intelligence, said the central bank is benefiting from a more stable macroeconomic environment, supported by easing external pressures and improving economic activity.
He said inflation remains above the SBP’s target range, while renewed Middle East tensions, volatile commodity prices and the possibility of a severe El Niño weather event continue to pose significant risks to the economy. He added debt repayments and reliance on official financing and loan rollovers mean policy discipline will remain essential.
S&P Global Market Intelligence projects Pakistan’s economy to expand by 3.5 percent in FY2027, driven by strengthening macroeconomic fundamentals.
The firm also expects the country’s external sector to improve further, supported by strong workers’ remittances and planned official inflows. It forecasts Pakistan’s foreign exchange reserves to rise to $19.5 billion by the end of December 2026.
Meanwhile, S&P expects the current account deficit to remain contained at 0.7 percent of GDP in calendar year 2026, widening slightly to 0.9 percent of GDP in 2027, while cautioning that commodity price shocks and adverse weather conditions remain the biggest downside risks to the outlook.
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