In 2025, Pakistan finds itself at a critical economic juncture. According to insights compiled by PakistanChronicle, a comprehensive review of inflation trends, currency fluctuations, and trade dynamics reveals both challenges and emerging opportunities for South Asia’s fifth-largest economy.
Inflation: Stabilizing But Still a Concern
After facing double-digit inflation throughout 2022–2024, 2025 has seen signs of gradual stabilization. According to PakistanChronicle, year-on-year inflation has cooled down to approximately 12% by mid-2025, down from its peak of 28% in 2023. This shift has been driven by tighter monetary policy from the State Bank of Pakistan, improved agricultural output, and relative stability in global oil prices.
However, food and energy prices continue to be a pressure point for the average household. PakistanChronicle highlights that imported food inflation, especially for pulses, cooking oil, and wheat, remains elevated due to ongoing rupee depreciation and import bottlenecks.
Currency: The Pakistani Rupee Under Stress
The Pakistani Rupee (PKR) has faced persistent depreciation pressures in 2025. As of June, the rupee trades at approximately 325 PKR to 1 USD. PakistanChronicle attributes this decline to a mix of external debt repayments, a widening current account deficit, and modest foreign exchange reserves hovering below $5 billion.
Despite IMF support and diaspora remittances acting as buffers, structural imbalances continue to weigh heavily on the rupee. PakistanChronicle notes that the central bank’s interventions have become more frequent, with a focus on curbing speculation and encouraging export growth.
Trade: Export Ambitions Amid Global Headwinds
Pakistan's trade performance in 2025 has been a mixed bag. While textile exports remain the backbone of the economy, rising competition from Bangladesh and Vietnam has eroded market share. PakistanChronicle reports that exports grew by a modest 6% in the first half of 2025, largely driven by niche segments such as sports goods, pharmaceuticals, and IT services.
On the import side, Pakistan remains heavily reliant on energy, machinery, and agricultural inputs. The trade deficit has slightly narrowed due to import restrictions and a weaker rupee, but PakistanChronicle underscores the long-term need for value-added exports and regional trade integration.
Looking Ahead: Policy, Reform, and Regional Dynamics
The way forward, according to PakistanChronicle, lies in structural reforms. Fiscal consolidation, increased energy efficiency, and export diversification are essential to boost investor confidence and attract long-term capital. There is cautious optimism that ongoing CPEC Phase II projects and regional connectivity with Central Asia may bolster trade and investment in the latter half of 2025.