Pakistan’s Remittances Rise 14% to $10.9 Billion in First Quarter

Pakistan’s economy recorded growth in remittances, exports, foreign direct investment and tax collection during the first quarter of fiscal year 2026-27, while higher imports and inflation continued to pose challenges, according to the Finance Division’s latest economic report.

Workers’ remittances increased 14% year-on-year to $10.9 billion during July-September, compared with $9.5 billion in the same period last year. In September alone, inflows rose 12.7% to $3.6 billion.

The increase in remittances supported foreign exchange availability and helped finance the country’s external payment requirements.

Exports increase as import bill rises

Pakistan’s goods exports grew 7.7% to $8.5 billion during the first quarter, up from $7.9 billion a year earlier. September exports rose 15.5% year-on-year to $3 billion.

Food exports increased 25.3%, supported by rice shipments, while textile exports grew 5.3%, with gains in cotton yarn, knitwear, towels and ready-made garments.

Imports, however, rose 14.3% to $17.8 billion during the quarter. September imports increased 22.7% to $6.2 billion, reflecting higher purchases of machinery, metals and transport equipment, alongside rising energy costs.

The trade figures contributed to a current account deficit of $874 million during July-September, compared with $755 million in the same period last year.

Foreign investment and reserves strengthen

Foreign direct investment increased 19.9% year-on-year to $719.7 million during the first quarter. September alone attracted $219.5 million in direct investment, an increase of 18.5%.

The report also highlighted a rise in portfolio investment, supported by Pakistan’s $3 billion sovereign Eurobond issuance in September.

The country’s total liquid foreign exchange reserves reached $26.8 billion as of October 16, including $21.5 billion held by the State Bank of Pakistan.

The rupee was quoted at Rs276.8 against the US dollar on October 28, according to the report’s exchange-rate table.

Tax collection exceeds quarterly target

The Federal Board of Revenue collected Rs3,086.2 billion during July-September, marking a 7% increase from the corresponding period last year. Collections exceeded the quarterly target by Rs33.2 billion.

Direct tax receipts increased 5.5%, while indirect tax collection grew 8.3%. Sales tax recorded the strongest growth among indirect taxes, rising 11.6%.

Federal non-tax revenue stood at Rs2,365.9 billion during the first quarter, according to the figures provided in the supplied data.

Pakistan recorded an overall fiscal surplus of Rs1,197.9 billion during July-August, equivalent to 0.8% of GDP. The primary surplus, which excludes interest payments, reached Rs2,311.2 billion, or 1.6% of GDP.

Both balances were lower than in the corresponding period last year, indicating that the government’s fiscal position remained in surplus but had narrowed.

Inflation remains above last year’s level

Average consumer inflation reached 10.2% during the first quarter, compared with 4.3% in the same period a year earlier.

In September, inflation stood at 10.3%, up from 5.8% in September 2025, although it eased from 11.1% in August.

Transport costs rose 27.4% year-on-year, while prices in the housing, water, electricity, gas and fuel category increased 12.4%. Food prices also remained under pressure.

The State Bank raised its policy rate by 50 basis points to 12% with effect from October 27, aiming to contain inflation risks linked to higher global energy prices and geopolitical tensions.

Industrial output and agricultural lending improve

Large-scale manufacturing grew 1.85% during July-August, although the pace was slower than the 4.82% recorded in the corresponding period last year.

Industrial performance remained uneven. Output increased in selected sectors, including automobiles and petroleum products, while lower production in food, chemicals and pharmaceuticals weighed on the August figures.

Agricultural credit disbursements rose 32.7% year-on-year to Rs540.5 billion during July-August, compared with Rs407.2 billion a year earlier.

The increase in farm lending, alongside stronger production of several major crops, could support agricultural activity and related industries in the coming months.

Stock market and company registrations

The KSE-100 Index stood at 165,736 points on October 28, up 3.52% from 160,101 points a year earlier.

Market capitalisation was recorded at Rs18.33 trillion, equivalent to $66.22 billion. While the dollar value was higher than a year earlier, rupee-denominated market capitalisation remained below its level at the end of June 2026.

Pakistan also registered 15,440 new companies during the first quarter, according to the supplied figures, representing a 37.3% year-on-year increase.

The latest indicators point to stronger external inflows and improved revenue collection, but rising imports, persistent inflation and uneven industrial growth remain important risks to the economic outlook. The sustainability of the recovery will depend on export performance, investment, price stability and continued growth in productive sectors.