THE State Bank governor’s optimistic growth outlook indicates that monetary easing, relaxation of import curbs and improvement in economic fundamentals are propelling GDP expansion at a faster pace during the current fiscal than previously projected. In an interview with Reuters, he predicted that our troubled economy could grow by as much as 4.75pc — the upper end of the bank’s revised 3.75-4.75pc forecast range — a projection likely to shape expectations and influence investor decisions. The IMF and other multilateral lenders, however, remain less bullish about the growth outlook. Though the SBP chief asserted that the recovery is “broad-based and durable”, few are convinced that Pakistan can break free from its entrenched boom-and-bust cycles that end in currency pressure, reserve depletion and renewed external stress whenever a faster pace is adopted. Indeed, the governor himself struck a note of caution when he acknowledged that structural reforms remain essential to sustaining stronger growth and improving productivity despite the recent gains in economic stability under the IMF loan.

In such a context, his optimism should be weighed against the economy’s deep structural weaknesses. True, the gradual impact of monetary easing through substantial rate cuts has eased financial conditions for firms, a trend reflected in the 6pc growth in large-scale manufacturing in July-November and growing imports amid recovering domestic demand. The liquidity injection resulting from a reduction in banks’ cash reserve requirement is also likely to spur private credit expansion, further supporting economic activity. The resilience shown by agriculture, despite flood-related losses, should likewise support growth. Still, our growth model is largely consumption-driven and import-intensive. While the expected growth rebound may be broad-based, its sustainability is uncertain. Thus, the possibility of the external account again coming under stress cannot be ruled out if domestic demand accelerates without export expansion. So, the question is not whether we can pull off speedier growth this year but whether it can be sustained.

Published in Dawn, February 13th, 2026