Barron’s, the renowned American financial publication, has praised Pakistan’s recent economic recovery, describing it as a “macroeconomic miracle of sorts,” while cautioning that the country’s progress remains precarious due to deep-rooted structural challenges.
In a report published Tuesday, Barron’s highlighted Pakistan’s remarkable macroeconomic stabilization over the past two years. Key indicators include a dramatic drop in inflation, from a record 38% in May 2023 to just 0.3% in April 2025, and a surge in investor confidence. The value of Pakistan’s 2031 Eurobonds has doubled, rising from 40 cents to 80 cents on the dollar, while the Pakistan Stock Exchange index has tripled in value.
The report credited Prime Minister Shehbaz Sharif’s government for securing a $7 billion stabilization agreement with the International Monetary Fund (IMF) last September, with over $2 billion already disbursed. “Pakistan is a good story,” said Genna Lozovsky, chief investment officer at Sandglass Capital Management, noting that the country’s risk profile has improved so much that it no longer fits the firm’s distressed debt strategy.
Barron’s also noted that the recent armed conflict with India is unlikely to derail Pakistan’s economic recovery. Finance Minister Muhammad Aurangzeb echoed this sentiment, telling Reuters that the skirmish was a “short duration escalation” with minimal fiscal impact, manageable within the government’s available fiscal space.
Despite these positive developments, the report underscored Pakistan’s continued reliance on international creditors, particularly the IMF, and its ongoing participation in a bailout program. Khaled Sellami, an emerging markets debt manager at Barings, observed that while Pakistan has historically experienced boom-and-bust cycles, there are signs of a more sustainable turnaround this time. “The current account balance is positive, and they have a primary fiscal surplus [excluding interest payments],” Sellami noted—an achievement not seen in years.
Alison Graham, chief investment officer at Voltan Capital Management, recalled that many expected Pakistan to default alongside Sri Lanka in 2023. Instead, the State Bank of Pakistan (SBP) took decisive action, raising interest rates from 10% to 22% to rein in inflation. Since June 2024, the central bank has reversed course, cutting the policy rate by 1,100 basis points to 11%.
The report also highlighted the support of Pakistan’s key sovereign creditors—China, Saudi Arabia, and the United Arab Emirates—who rolled over their loans, helping the country avoid a liquidity crisis. GDP growth rebounded to 2.5% last year, and the country’s fiscal books are “uncustomarily balanced,” Barron’s noted.
However, significant challenges remain. Under the IMF program, Pakistan is required to increase tax revenues by 50% and reduce electricity subsidies, among other reforms. The country’s export base is still narrow, with cotton, apparel, and cereals making up two-thirds of exports. While IT outsourcing has grown to $3 billion annually, it still pales in comparison to India’s $200 billion tech export industry.
Barron’s cautioned that without moving up the value-added ladder, Pakistan risks falling back into its familiar cycle of boom and bust, especially during election years. “Pakistan remains extremely fragile to external shocks,” Graham warned, advising investors to act early during rallies.
Sellami remained optimistic about Pakistani Eurobonds but noted that with Pakistan’s strategic importance to the US waning, allies like China and Gulf states are less willing to provide unconditional support. “The government knows if they deviate from the tightrope they are walking, they won’t have external finance,” he said.
Overall, while Barron’s acknowledged Pakistan’s impressive economic turnaround, it emphasized that the path ahead remains fraught with risks and requires continued discipline and reform.
