Economy vulnerable to external shocks

As the federal government plans to table the budget for 2025-26 after Eidul Azha, an economic round-up shared by an Islamabad-based think tank urged the government to prevent “bad growth”, highlighting that Pakistan’s economy has faced similar challenges in the past. A report by Tabadlab advised against increasing tax rates, saying they were already among the highest in the region. It also cautioned against consumption-led growth due to insufficient forex reserves. “Forex reserves are low (only two months of imports, as of June 3) to open up all imports. Has been done before: causes boom-and-bust cycles,” it added. However, it observed most key indicators have largely stabilised, but the economy remains fragile to external shocks. Inflation decelerated to 5 per cent, the interest rate was cut from 21pc to 11pc, the rupee settled around Rs280 against the US dollar, and the risk of default subsided as debt didn’t grow at a high rate, the report noted.