KARACHI: The Institute of Cost and Management Accountants of Pakistan (ICMA) has released its latest Pre-Monetary Policy Outlook, revealing a notable improvement in Pakistan’s external economic environment ahead of the upcoming Monetary Policy Committee (MPC) meeting.
According to ICMA’s External Economic Stress Index (EESI), Pakistan’s external stress level declined to -6.12 in August 2026, indicating that supportive global economic conditions outweighed external vulnerabilities during the period. The index suggests a relatively favorable external sector outlook, supported by stronger global economic activity, resilient remittance inflows, and improved foreign investment trends.
The EESI is an ICMA-developed analytical framework, adapted from international best practices, that tracks Pakistan’s exposure to external economic shocks through five key indicators: global economic growth, international oil prices, food prices, financial market volatility, and global supply-chain pressures. The index provides policymakers with a consolidated measure of risks originating from the global economy and their potential impact on Pakistan.
The report notes that August 2026 reading reflects a moderation in external economic pressures, suggesting that positive global developments and stronger external inflows have helped improve Pakistan’s resilience to international shocks. Robust global economic activity contributed positively to Pakistan’s economic outlook by supporting exports, remittances, and investor confidence. At the same time, a recovery in foreign direct investment helped ease pressure on the country’s external account.
Despite the encouraging trend, ICMA cautioned that significant external risks continue to persist. Rising international oil prices, ongoing geopolitical uncertainties, and supply-chain disruptions remain key vulnerabilities for Pakistan, which is heavily dependent on imported energy. Any adverse developments in these areas could increase inflationary pressures, widen the import bill, and affect overall macroeconomic stability.
In light of these risks, ICMA has recommended that policymakers strengthen external-sector monitoring, conduct periodic stress-testing of financing requirements, enhance foreign exchange liquidity planning, and integrate scenario-based global risk assessments into monetary policy decisions.
Commenting on the findings, ICMA emphasized that while the latest EESI reflects improving external conditions, sustaining economic stability will require prudent policymaking and continued vigilance against emerging global challenges.
The Institute believes that a balanced approach to monetary policy, supported by strong external-sector management, will be critical in preserving macroeconomic stability and supporting Pakistan’s growth trajectory in the months ahead.
