State Bank of Pakistan Governor Jameel Ahmad has said Pakistan’s economic fundamentals have improved despite severe world and regional shocks. The SBP governor economic recovery message came at the annual convocation of the Institute of Cost and Management Accountants of Pakistan in Karachi.
The governor said the recovery since 2022 has been remarkable. He told graduates that the country has come a long way since 2022, even though challenges remain.
“Despite the significant supply shocks, we have managed to contain the impact on the domestic economy,” he said. “Inflation remained close to our target range in fiscal 2026. While it has gone up since then, it is projected to gradually ease towards the target range, supported by prudent monetary tightening.”
SBP governor economic recovery: growth, inflation and the external account
The external account remains stable, Ahmad said, with the current account deficit expected to stay within zero to 1 per cent of gross domestic product. Real GDP growth is recovering gradually, from a contraction in fiscal 2023 to 3.7 per cent in fiscal 2026, and he said it should rise further in the current fiscal year.
He said international credit rating agencies, multilateral partners and foreign investors now recognise the improvement in fundamentals and the growing resilience of the economy.
The governor reflected on the adjustments made in fiscal 2022 and fiscal 2023. Timely and decisive action, fiscal discipline and evidence based policy helped strengthen resilience, he said. Raising the policy rate and holding it for almost a year, alongside temporary measures to manage non-debt foreign exchange outflows, had been needed to restore stability and avoid a deeper financing and debt crisis.
He stressed that lasting progress cannot come from short term fixes at the expense of long term stability. Keeping a positive forward looking real policy rate helped bring inflation down from over 30 per cent to within the medium term target range, he said.
Supervision and a message to graduates
Risk based supervision strengthened the identification of financial stability risks, Ahmad said. Financial sector adequacy and performance indicators improved despite the high policy rates.
Addressing graduates directly, he said evidence should guide their judgement and professional ethics should define their conduct. He urged them to let long term commitment to Pakistan’s sustainable and inclusive development inform their actions.
He closed by stressing the role of the accounting and finance profession in strengthening institutions, promoting accountability and informing decisions. He said he was confident graduates would use their training to help shape the country’s economic future.
The same morning brought a sharper warning
The speech landed on the same morning economists warned that more rate hikes may follow if oil prices stay high. Their forecast puts average inflation at 11 to 13 per cent in fiscal 2026-27, above the easing path the governor described.
The contrast matters. The governor points to a recovery built since 2022, with growth back to 3.7 per cent and the external account stable. The economists point to fresh risks, from energy prices to fears of a wider regional conflict, that could force borrowing costs higher still.
The governor has made the resilience case before. In October he pointed to a resilient economy as reserves improved, as reported here: SBP Governor Points to Resilient Economy as Reserves Reach $21.5 Billion. The rate decision behind the current debate came on October 26, covered here: SBP Raises Policy Rate to 12 Per Cent. Reserves updates since then are covered here: SBP Forex Reserves Seen at $25 Billion by June 2027 and here: SBP Forex Reserves for Week of October 16.
What happens next
The test of the governor’s message will come in the inflation data. If inflation eases towards the target range as he projects, the tight policy stance can hold without further hikes. If energy prices stay high and inflation stays broad, the economists’ warning gains weight.
For now, the central bank’s position rests on the record since 2022: a contraction turned into 3.7 per cent growth, inflation brought down from over 30 per cent, and an external account held within 1 per cent of GDP.
What did the SBP governor say about growth?
He said real GDP growth recovered from a contraction in fiscal 2023 to 3.7 per cent in fiscal 2026, and he expects it to rise further in the current fiscal year.
