Investing

Pakistan’s trade deficit widened by 34.6% in the first half of FY26, reaching $19.2 billion. According to the Pakistan Bureau of Statistics, exports fell 8.7% to $15.18 billion, while imports rose 11.28% to $34.38 billion. In December alone, exports dropped 20% year-on-year, while imports increased 2%, underscoring ongoing strain on the country’s trade balance.

Islamabad celebrated the new year with the opening of the Shaheen Chowk underpass, marking the completion of 18 development projects in 2025. The project, completed in a record 63 days instead of the slated 150, is part of a major infrastructure push that includes the Serena Interchange and Murree Road underpass. Looking ahead, Interior Minister Mohsin Naqvi announced "Vision 2027", a two-year roadmap for 2026–2027. This next phase will shift focus toward urban beautification, overhauling city parks, and doubling the number of development projects to modernize the federal capital's image.

To expedite the long-stalled Peshawar Northern Bypass, the Khyber Pakhtunkhwa government has agreed to provide PKR 4 billion in bridge financing through bank guarantees. The 30-kilometer project has been delayed for 17 years due to inconsistent federal funding, causing its cost to balloon from PKR 3 billion to PKR 27 billion. Chief Minister Sohail Afridi emphasized that the bypass is critical for trade and traffic flow, set a completion deadline of June 2026, and committed an additional PKR 200 million for immediate construction needs.

Pakistan's economy grew 3.71 percent in Q1 FY26 (July-September), up from 1.56 percent last year but down from the prior quarter's 6.17 percent due to weak demand and floods. Industrial output surged 9.38 percent, agriculture rose 2.89 percent despite crop declines, and services increased 2.35 percent. SBP projects 4 percent FY26 growth, with the government targeting 4.2 percent.

China’s aerospace firm PIESAT is strengthening artificial intelligence and space cooperation with Pakistan after showcasing satellite, drone and remote-sensing technologies at the AI Rise Expo 2025 in Islamabad. The company is working with SUPARCO on a 2.9 billion yuan ($400 million) satellite network deal that includes a local satellite manufacturing facility and an integrated system for real-time communications and remote sensing. Officials say the partnership aligns with the government’s “Uraan Pakistan” vision to drive technology-led growth and support services such as disaster management, agriculture monitoring and urban planning.

Pakistan plans to issue its first Panda Bond in China's markets, signaling maturing bilateral ties, Finance Minister Muhammad Aurangzeb told CGTN. He highlighted $17 billion in trade, CPEC Phase-II's launch focusing on asset monetization and B2B deals, and investment in agriculture, minerals, AI, and digital economy with knowledge transfer. The move strengthens the "all-weather" strategic partnership.

U.S. companies are increasingly turning to Pakistan as a potential supplier of antimony, a critical mineral used in defence and technology industries, according to the Financial Times. Rising concerns over China’s control of global mineral supply chains have led American firms to explore partnerships in Pakistan. Deals involving Himalayan Earth Exploration, Nova Minerals, and the Frontier Works Organisation signal growing U.S. investment interest in the sector. Although Pakistan holds a small share of global antimony reserves, experts see the trend as an opportunity to expand local mining capabilities and strengthen U.S.–Pakistan economic ties.

Commissioner Lahore Marryam Khan chaired a RUDA meeting to review ongoing and planned development projects along the River Ravi, including 16 river drainage packages, embankment works, Ravi City and bridge schemes from Syphon to the Railway Bridge and up to the M-2 Motorway. She directed the district administration to manage revenue matters along the river belt and ordered strict legal action against illegal sand extraction without permits. The commissioner praised the cooperation of Lahore and Sheikhupura administrations, noting that RUDA and CBD projects are key regional development initiatives requiring close inter-departmental coordination.

Government borrowing from banks has risen to Rs672 billion in the first half of FY26, reversing last year’s debt retirement trend. The State Bank of Pakistan reports that 86 per cent of the fiscal deficit is financed through banks, limiting liquidity for the private sector. Analysts expect higher borrowing in the second half due to revenue shortfalls. Despite increased dividend transfers of Rs2.7 trillion in FY25, reliance on domestic sources remains high as external funding lags. Meanwhile, the World Bank has approved $700 million under a $1.35 billion initiative to help Pakistan strengthen fiscal management and boost public sector efficiency.