Pakistan’s economy is stabilising with higher growth, stronger reserves and new IPOs, as Saudis welcome reforms and deeper economic cooperation in Davos 2026.
Economic Stability and Growth Outlook
Finance Minister Muhammad Aurangzeb has said that Pakistan’s economy has moved out of a crisis phase and is now entering a more stable growth path. In a meeting with Saudi Finance Minister Mohammed Aljadaan on the sidelines of the World Economic Forum Annual Meeting 2026 in Davos, he highlighted recent macroeconomic indicators that point to an improvement in confidence. Foreign exchange reserves have strengthened and now provide an import cover of around three months, a marked improvement from the precarious levels seen in earlier years.
Aurangzeb noted that the economy grew by 3.1 percent last year and that growth has accelerated to 3.7 percent in the first quarter of the current fiscal year. While this pace is still below Pakistan’s long-term potential, it represents a clear turnaround from the near-stagnation experienced during the height of the balance-of-payments pressure. He stressed that maintaining a sustainable current account alongside steady GDP growth remains the government’s central objective.
Reserves, Interest Rates and Capital Market Revival
The finance minister underlined that interest rates have begun to ease as inflation pressures show early signs of moderation. However, he reiterated that monetary policy decisions remain the exclusive domain of the State Bank of Pakistan, underscoring the importance of central bank independence. A more predictable rate environment, he said, will help businesses make long-term investment plans and support a broader recovery in credit growth.
Aurangzeb also pointed to renewed activity in Pakistan’s equity markets as evidence of improving investor sentiment. He shared that sixteen initial public offerings (IPOs) are currently in the pipeline, following nine successful listings last year. More than 120,000 new investors have entered the capital market, reflecting growing interest in formal investment channels. According to him, this deepening of the investor base is vital for mobilising domestic savings and reducing reliance on external borrowing.
Remittances, IT Exports and Investment Priorities
Remittance inflows continue to act as a key pillar of stability for Pakistan’s external account. Aurangzeb said that remittances stood at about $38 billion last year and are expected to rise to over $41 billion this year, providing a steady source of foreign exchange and supporting household incomes. At the same time, growth in information technology and IT-enabled services exports is increasingly contributing to the services trade balance, helping to diversify earnings beyond traditional sectors.
The finance minister briefed his Saudi counterpart on Pakistan’s efforts to attract foreign direct investment into priority sectors. These include minerals and mining, agriculture, and export-oriented industries where Pakistan seeks technology transfer, job creation and higher value-added production. He emphasised that the government is streamlining approvals and strengthening regulatory frameworks to give investors greater clarity and comfort, particularly in partnership with friendly countries such as Saudi Arabia.
Privatisation Drive and Saudi-Pakistan Economic Ties
On the reform side, Aurangzeb outlined ongoing privatisation efforts aimed at reducing the fiscal burden of loss-making state-owned enterprises and improving service quality. He mentioned that the government has concluded key transactions in recent months, including a notable digital-sector investment from the United Arab Emirates, and that progress is underway on restructuring and privatising Pakistan International Airlines. Plans are also in place for the phased privatisation of selected power distribution companies and major airports in Islamabad, Lahore and Karachi.
He stressed that the Privatisation Commission is working under clear direction and strong institutional oversight to ensure a transparent, structured process. Saudi Finance Minister Mohammed Aljadaan welcomed Pakistan’s recent economic progress and shared his country’s own experience with privatisation, citing airport reforms as a successful model. Both sides reaffirmed their commitment to deepening economic cooperation, signalling that more Saudi investment in Pakistan’s key sectors could follow if reforms stay on track.
