ISLAMABAD: The Annual Plan 2026-27 has warned that a prolonged Gulf conflict could adversely affect Pakistan’s external sector.
The plan said a prolonged conflict could disrupt trade with GCC countries, affect exports of goods and services and reduce remittance inflows from more than one million Pakistani workers in the Gulf, which are crucial for Pakistan’s balance of payments.
The government has envisaged a GDP growth rate target of 4.0 per cent, but CPI-based inflation is projected to rebound and touch 8.2 per cent in the next fiscal year 2026-27.The Annual Plan, approved by the National Economic Council (NEC) and tabled in parliament with the budget documents, noted that disruptions to global energy supply chains caused by the conflict could increase oil import costs and worsen Pakistan’s trade deficit.
For FY2026-27, GDP growth has been targeted at 4.0 per cent, with agriculture projected to grow by 3.6 per cent, industry by 4.5 per cent and services by 4.2 per cent. The CPI- Inflation is targeted at 8.2 per cent for the next fiscal year.
The agriculture sector is targeted to grow by 3.6 per cent based on climate-resilient policy interventions, better availability of inputs, efficient irrigation and farm mechanisation initiatives. The industrial sector is projected to maintain a steady growth trajectory in FY2026-27, with a target of 4.5 per cent. Within the sector, manufacturing is expected to remain the key driver of industrial growth, supported by broad-based improvements across allied subsectors. The services sector is projected to grow by 4.2 per cent. Stronger growth in agriculture and industry, coupled with higher demand for wholesale and retail trade as well as transport and storage activities, is expected to support growth in the services sector.
Total investment is targeted at 15.0 per cent of GDP in FY2026–27, driven by economic recovery, an improved business climate and political stability. The government’s continued focus on investment, industrial revival, export-led growth strategy and infrastructure development initiatives envisaged under URAAN Pakistan and the 13th Five Year Plan is expected to contribute to achieving the targets.
Fixed investment is targeted at 13.3 per cent, supported by ongoing reforms to improve ease of doing business, promote public-private partnerships, attract foreign direct investment and expand financing opportunities for SMEs and the private sector.
National savings are targeted at 14.3 per cent of GDP in FY2026–27, supported by macroeconomic stabilisation, financial sector deepening, digitisation of financial services, expansion of banking outreach and government measures to encourage remittances, formal savings instruments and documentation of the economy.
During FY2026-27, exports for goods are projected to remain at $32.85 billion in FY2026-27. A multipronged export strategy anchored in three pillars — markets, products and firms — is being pursued to support Pakistan’s transition towards sustained, higher-value export growth. The initiatives mainly include value addition, regional integration, policy consistency, launch of strategic trade policy framework, service exports, compliance and productivity, trade facilitation & logistics efficiency, export diversification & SME integration, trade finance access and digital trade & e-commerce exports.
Workers’ remittances are projected to reach $42.38 billion in FY2026-27 by promoting formal remittance channels, expanding into European and emerging labor markets, enhancing language and skills training, increasing overseas employment to 1.1 million, and raising the skilled migrant share from 44 per cent to 50 per cent through collaboration with TVET institutions and universities.
The Ministry of Overseas Pakistanis and Human Resource Development (MoOPHRD) will focus on three strategic priorities —- market diversification, institutional modernisation and human capital development. Market diversification will involve expanding labour mobility partnerships with European countries including Germany, Italy and others, while maintaining strong engagement with GCC countries during FY2026-27.
IT exports are anticipated to reach $6.5 billion in FY2026-27. The growth of the IT industry is expected to have positive ripple effects on other sectors such as e-commerce, financial services and public services (e-government).
The current account deficit is projected at around $3.599 billion in FY2026-27 if the ceasefire leads to a broader settlement of the conflict. The plan warned, however, that a continuation of the Gulf conflict could undermine these projections by disrupting trade with GCC countries, increasing energy import costs and affecting remittance inflows from Pakistani workers in the region.
