ISLAMABAD: Pakistan’s investments and savings in terms of GDP ratio have remained unable to fuel a higher growth rate in the outgoing fiscal year 2025-26.
The GDP growth rate clinched 3.7 per cent for the outgoing fiscal year. The government failed in achieving the envisaged target on the investment to GDP ratio, as it stands at 14.4pc of GDP in 2025-26 against the desired target of 14.7pc. The national savings stood at 14.4pc of GDP in accordance with the fixed target.
However, some figures of investment, especially from the private sector in the construction sector, have raised many eyebrows as this investment jumped by 60pc. In the last two years, in totality, the private sector investment grew by 110pc, which seems quite contrary to the ground realities. Despite the establishment of the much-hyped Special Investment Facilitation Council (SIFC), the government could not lure foreign investment as total investment in percentage of GDP remained unchanged at 14.4pc in fiscal year 2024-25 and 2025-26.
According to approved figures of investment and savings by the National Accounts Committee (NAC), which will be published along with the upcoming Economic Survey for 2025-26, the public sector investment declined to 3.1pc of GDP in 2025-26 compared to 3.3pc of GDP in the last fiscal year 2024-25. It is generally believed that the increase in the public sector investment resulted in jump-starting of the sluggish economic activities that ultimately lured the private sector investment. But in Pakistan, the official data shows that the private sector investment has gone up and stood at 9.6pc of GDP in the outgoing financial year 2025-26.
Interestingly, the fixed investment stood at 12.7pc of GDP in the outgoing fiscal year 2025-6 compared to the same level in the last financial year.The savings to GDP ratio stood at 14.4pc in the outgoing fiscal year against 14.8pc of GDP in the last fiscal year. The foreign savings stood at zero while domestic savings stood at 7.3pc of GDP in the current fiscal year.
Pakistan’s savings and investment trends highlight continued economic challenges. National savings as a percentage of GDP stood at 13.0pc in FY2022-23, declined slightly to 12.6pc in FY2023-24, but increased to 14.1pc in FY2024-25 and now stands at 14.4pc of GDP in 2025-6.Domestic savings consistently improved from 6.8pc in FY2022-23 to 7.0pc in FY2023-24 and 7.4pc in FY2024-25, indicating a decline in inflation that supported households in saving more. Foreign savings stood at -0.4pc of GDP in FY2024-25 compared to 0.6pc in FY2023-24 and 1.0pc in FY2022-23, indicating a gradual improvement in the current account balance.
Total investment declined from 14.0pc of GDP in FY2022-23 to 13.1pc in FY2023-24, with a significant recovery to 13.8pc in FY2024-25. Fixed investment followed a similar trend, falling from 12.3pc to 11.4pc before improving to 12.0pc in FY2024-25. Public investment dropped significantly from 3.0pc in FY2022-23 to 2.4pc in FY2023-24 but rebounded to 2.9pc in FY2024-25, reflecting renewed development spending. However, private investment remained sluggish, increasing from 9.0pc to 9.1pc in FY2024-25.
India’s GDP growth hovered in the range of 6.5pc compared to 4.4pc for Pakistan in the last decade. Vietnam’s growth remained over 6.7 per cent and even Bangladesh’s growth averaged 5.4 per cent, outperforming Pakistan.
