Karachi: Pakistan’s economy is exhibiting contrasting signals as the stock market achieves unprecedented growth while foreign direct investment and tax revenues face significant challenges, according to Mian Zahid Hussain, a prominent business leader.
The Pakistan Stock Exchange (PSX) has reached new heights, with the KSE-100 index soaring to an all-time high of 161,611 points. This increase is attributed to local liquidity and a sense of optimism about the country’s security situation and inflation stability.
Despite these market gains, concerns persist in other economic areas. Foreign Direct Investment (FDI) has decreased by 26% in the first four months of the current fiscal year, totaling $747.7 million, a decline from the previous year’s $1.01 billion for the same period. This downturn includes a significant reduction in investments from China, raising concerns about foreign investor confidence.
Additionally, tax revenue collection is not meeting targets. The Federal Board of Revenue (FBR) collected approximately Rs 852 billion in November 2025, falling short of the Rs 1,003 billion target, resulting in a gap of nearly Rs 100 billion. Mian Zahid Hussain emphasized the importance of broadening the tax base rather than increasing the burden on current taxpayers and industry.
On the international stage, while the IMF has reached a staff-level agreement with Pakistan, the Fund’s latest reports highlight the necessity of addressing structural inefficiencies to unlock GDP growth potential. The IMF Executive Board is set to review the release of a $1.2 billion tranche in December.
Security concerns also loom, with recent terrorist attacks in Rawalpindi, Peshawar, and Bannu impacting investor sentiment. Looking forward, Mian Zahid Hussain expects a period of cautious consolidation, with GDP growth projected to remain modest at 3.0% to 3.4%.
While the stock market may continue its upward trajectory, the focus remains on addressing fiscal challenges and boosting exports. Mian Zahid Hussain underscored the importance of government action to reduce business costs, particularly in energy tariffs and bank markups, to convert market optimism into tangible economic growth.