SBP chief says economy resilient amid Middle East tensions

ISLAMABAD: (Web Desk) – Governor of the State Bank of Pakistan, Jameel Ahmed, has stated that Pakistan’s economy is now in a stronger position to withstand external shocks, including uncertainties stemming from tensions in the Middle East and the ongoing Iran-related conflict.

He explained that key economic indicators performed beyond expectations at the start of the current fiscal year. A balanced mix of monetary and fiscal measures has played a central role in reducing inflation while strengthening the country’s external financial standing.

While speaking to senior representatives of global financial institutions, including international banks and credit rating agencies, Ahmed acknowledged that the evolving situation in the Middle East has introduced new risks. Despite this, he stressed that Pakistan’s economy is far more stable compared to previous periods of crisis.

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These engagements took place on the sidelines of the IMF-World Bank Spring Meetings 2026, held from April 13 to 18 in Washington, where he also held discussions with officials from the International Monetary Fund and the World Bank.

Ahmed pointed out that prior to the recent geopolitical developments, Pakistan had already made meaningful progress toward economic stability. Inflation has been kept within target ranges, while fiscal discipline and external buffers have shown improvement.

He noted that inflation averaged 5.7 percent during the first nine months of the fiscal year, while the current account remained in surplus. Foreign exchange reserves climbed to $16.4 billion, primarily due to central bank market purchases, and are projected to reach around $18 billion by June 2026 with continued financial inflows and bilateral support.

The governor further shared that improved macroeconomic stability has contributed to a gradual recovery in growth. Pakistan’s real GDP expanded by 3.8 percent in the first half of FY26, compared to 1.8 percent during the same period last year.

He emphasized that the country is now better prepared to absorb external shocks than during earlier crises, such as the disruptions caused by the Russia-Ukraine war.

Although rising global energy prices, higher shipping costs, and increased insurance premiums could exert pressure due to Middle East tensions, Ahmed maintained that stronger economic fundamentals provide a cushion against such risks.

He reaffirmed that both the central bank and the government remain committed to maintaining price stability and will act when necessary. Monetary policy remains cautious, with interest rates kept at sufficiently high real levels.

On the fiscal front, he noted that the government has achieved primary budget surpluses and introduced targeted subsidies along with austerity measures to manage economic pressures.

Ahmed also highlighted Pakistan’s staff-level agreement with the IMF and a favorable credit rating outlook as indicators of growing international confidence in the country’s reform agenda.

During his visit, he interacted with members of the Pakistani diaspora and promoted initiatives such as the Roshan Digital Account. He shared that inflows under the program have surpassed $12.4 billion across more than 917,000 accounts, with recent regulatory changes allowing non-resident entities to participate, aiming to attract greater foreign investment and strengthen Pakistan’s integration into global markets.