State Bank of Pakistan said Pakistan’s economic stability improved during the first half of fiscal year 2025-26, but the ongoing Middle East conflict could create serious risks for the country’s economic outlook.
In its Half Year Report 2025-26 titled “The State of Pakistan’s Economy,” the central bank stated that macroeconomic conditions remained stable despite challenges caused by global trade uncertainty and domestic floods in Pakistan.
The report warned that the Middle East war may disrupt supply chains, impact inflation, affect external trade and remittance flows, and slow overall economic activity in the country.
According to the SBP, recent economic indicators including PMI, large-scale manufacturing, and the construction sector showed positive momentum through February. However, the ongoing regional conflict has started putting pressure on economic output during the remaining months of FY26.