brecorder15d ago
Pakistan’s engagement at the World Economic Forum Annual Meeting 2026 in Davos marked a decisive and visible shift in how the country is perceived on the global economic stage. The conversations were no longer about crisis management, balance-of-payments stress, or emergency financing. Instead, they centered on reforms, investment pipelines, partnerships, and long-term, sustainable growth.Led by the Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, Pakistan’s economic team returned from Davos with renewed credibility and tangible investor confidence. Pakistan was consistently presented not as an economy in distress, but as one that has achieved macroeconomic stabilisation and is now firmly transitioning toward investment-led, export-oriented, private-sector-driven growth.This shift is grounded in hard data and forward-looking credibility. Pakistan recorded GDP growth of 3.09 percent in FY25, accelerating further to 3.71 percent in the first quarter of FY26. Inflation declined sharply to 4.5 percent in FY25 and remained contained at 5.1 percent in the first half of FY26 despite climate-related shocks. Importantly, the State Bank of Pakistan’s Monetary Policy Committee projects inflation to remain within a sustainable 5–7 percent range by June 2026, reinforcing confidence in price stability. Growth momentum is expected to strengthen further, with GDP projected in the 3.75–4.75 percent range, reflecting improving fundamentals and reform transmission.For the second time in two years, Pakistan posted a fiscal surplus in Q1 FY26, alongside a primary surplus of 2.7 percent of GDP, a clear evidence of restored fiscal discipline.External buffers have strengthened meaningfully. State Bank reserves have risen to USD 16.1 billion, a four-year high, with import cover improving to 2.6 months from 1.7 months a year earlier. Remittances reached a record USD 38 billion in FY25 and continue to grow, expected to cross USD 41 billion in FY26. Technology sector exports growing into double-digits (+20 percent in 1HFY26) are expected to cross USD 4 billion in FY26, compared to USD 3.8 billion in FY25. The current account swung from a deficit to a surplus in FY25, and remains well anchored, with projections indicating a contained balance within 0–1 percent of GDP. The exchange rate has stabilized, reinforcing overall macro confidence.Equally important has been the credibility of reforms. Pakistan’s tax-to-GDP ratio rose to 10.3 percent in FY25- the highest in 25 years - reflecting both policy measures and digitization. Public debt has declined to 70.7 percent of GDP from 75 percent two years earlier, with average maturities extended and early debt retirements generating significant interest savings that are expected to continue into FY26. The policy rate has fallen dramatically from 22 percent in mid-2024 to 10.5 percent, with secondary market yields now in single digits after five years, unlocking private credit growth, particularly for SMEs and agriculture.These fundamentals framed Pakistan’s engagements with global and regional finance ministers from Saudi Arabia, the United Arab Emirates, Kuwait, and Egypt. Discussions moved decisively beyond short-term financial support toward long-term economic cooperation, privatization, infrastructure, and private investment. Partners acknowledged Pakistan’s stabilization and reform trajectory, with growing emphasis on airports, SOEs, energy, technology, and capital markets.Multilateral institutions echoed this renewed confidence. The Asian Development Bank emphasized that Pakistan is entering a critical phase of economic transformation, with strong focus on private-sector participation, energy transition, and delivery. Engagements with the Gates Foundation underscored the importance of institutional capability- digital taxation, governance reforms, health systems, and self-reliance - rather than aid dependency.Perhaps the strongest validation came from global corporates and investors, who increasingly vote with capital rather than commentary. Nestlé announced an additional USD 60 million investment and plans to position Pakistan as a regional manufacturing and export hub serving 26 countries. The State Oil Company of the Azerbaijan Republic (SOCAR) confirmed imminent investment in Pakistan’s energy sector, while Visa reaffirmed its long-term commitment to digital payments and financial inclusion. Investor interest in aviation privatization and logistics further reinforced confidence in Pakistan’s reform direction.Financial markets tell a similar story. Pakistan’s equity market rose over 50 percent in US dollar terms in 2025, ranking among the world’s top-performing markets. New investor participation has surged, IPO activity has doubled relative to the last decade’s average, and company registrations, almost entirely digital, are accelerating. Private-sector credit expanded by over 13 percent, signaling improving confidence and demand.Beyond stabilization, Pakistan is also positioning itself for the next phase of growth through structural and institutional reforms already underway. Privatization of state-owned enterprises, energy sector restructuring, pension reform, rightsizing of government, and modern debt management are under active execution. Pakistan is simultaneously laying foundations for the new economy, with rapid progress in digital finance, fintech, blockchain, and virtual assets regulation, which are the key areas where investor interest is rising sharply.External validation has followed. Major rating agencies and international financial institutions have acknowledged Pakistan’s improving macro outlook, rebuilt buffers, and reform momentum. Independent surveys show business confidence, consumer sentiment, and CEO optimism at multi-year highs, with a growing majority of foreign investors now viewing Pakistan as a viable and attractive destination (latest OICCI’s survey shows 73 percent of existing foreign investors now see Pakistan as a viable FDI destination).Davos 2026 is therefore not an end point, it is a pivot. The task ahead is clear: convert confidence into sustained execution, commitments into capital, and reforms into durable institutions. Policy continuity, disciplined implementation, and deepening private-sector participation will help translate this momentum into sustained growth.The signal from Davos is unmistakable. Pakistan is no longer seeking rescue. It is seeking partnerships. It is open for business, capital, and impactful long-term growth, and is increasingly being engaged as such by the global investment community.Copyright Business Recorder, 2026
