A leading international financial publication has termed Pakistan’s recent economic performance as an “economic miracle.”
According to the report, Barron’s — a sister organization of the renowned Wall Street Journal — stated that investors may regret ignoring Pakistan, a country of 255 million people that has achieved an economic turnaround in the past two years.
Barron’s highlighted that annual inflation, which was once at 40%, has now dropped to nearly zero. The value of Pakistan’s Eurobonds maturing in 2031 has surged from 40 cents to 80 cents on the dollar, and the Karachi Stock Exchange Index has tripled.
The report also mentioned that the Shehbaz Sharif government signed a $7 billion stabilization deal with the IMF in September, of which over $2 billion has already been disbursed.
Commenting on the situation, Gina Lozovsky, Head of Investments at Sandglass Capital Management, remarked, “Pakistan is a good story.”
Economist Khalid Salami stated that the conflict with India will not impact Pakistan’s economic recovery; however, internal structural weaknesses might pose a challenge.
The report noted that Pakistan’s recent stabilization began after it nearly defaulted in 2022–23.
Allison Graham, Chief Investment Officer at Walton Capital Management, observed that many expected Pakistan to default like Sri Lanka. However, the State Bank of Pakistan raised interest rates from 10% to 22%, which pushed the country into a recession but helped control inflation.
Graham added that GDP growth returned to 2.5% last year, financial accounts are unusually balanced, the current account is positive, and a primary fiscal surplus is in place — a development not seen in years.
She also noted that the government still needs to increase tax revenue by 50%, reduce electricity subsidies, and make other tough decisions.
Barron’s concluded that circumstances have presented Shehbaz Sharif and his military allies with the strongest incentive yet for economic reform and progress.
