By Staff Reporter
ISLAMABAD: Pakistan’s finance ministry forecasts inflation will stay between 3% and 4% in June, signaling stability in prices as the economy shows tentative signs of recovery bolstered by manufacturing gains and a stronger external position.
“Inflation is expected to remain within the range of 3.0-4.0pc for June 2025,” the minister said in it Monthly Economic Update and Outlook, released on Monday
The forecast follows a pickup in inflation last month, with the consumer price index (CPI) rising 3.46% year-on-year in May, the highest since December, according to the Pakistan Bureau of Statistics. That marked a reversal from months of slowing price growth.
Analysts see the ministry’s outlook as credible. “We projected the inflation to remain at 3.2pc in June,” said Awais Ashraf, director of research at AKD Securities, noting that their estimates align closely with the official projection.
The report pointed to a patchy performance in the Large-Scale Manufacturing (LSM) sector, which grew 2.3% year-on-year in April but shrank 3.2% from March.
Despite the uneven data, the ministry remains upbeat about the sector’s trajectory. “The outlook for LSM in the coming months appears to be positive, supported by encouraging trends in high-frequency indicators such as cement dispatches and automobile sales,” it said.
Vehicle sales underscored that optimism, with cars, SUVs, pickups, and vans totaling 14,762 units in May—a 35% jump from a year earlier and a 39% increase from April. The surge highlights a rebound in the automotive industry, a key LSM component.
Private sector borrowing also picked up, a sign of growing production and confidence. “The uptake in loans to the private sector businesses suggests rising production activities and improved investor confidence,” the ministry noted.
Pakistan’s external accounts continued to improve, with the current account logging a surplus of $1.81 billion from July to April of fiscal year 2024-25. “On the external front, higher remittances and exports will continue to keep the current account in surplus for FY 2025,” the report said. The fiscal deficit narrowed over the same period, while the primary surplus hit 3.2% of GDP.
In agriculture, the ministry expects output to rise thanks to better seeds and mechanisation. “Imports of agricultural machinery rose by 10pc, worth $69.2 million in July–Apr FY202 speculate FY2025, indicating rising mechanisation,” the report said.
For the Kharif season 2025-26, the government has set cotton targets at 2.2 million hectares of cultivation and 10.18 million bales of production.
Fertilizer use is also up, with urea offtake in April reaching 418,000 tonnes (a 4.6% year-on-year increase) and DAP offtake hitting 95,000 tonnes (up 135.2%). Estimated availability for Kharif 2025 stands at 4.012 million tonnes of urea and 840,000 tonnes of DAP.
Earlier this month, Finance Minister Muhammad Aurangzeb unveiled the Pakistan Economic Survey 2024-25, projecting GDP growth of 2.7% for the fiscal year ending June 30. That’s below the 3.6% target, the third straight year the government has fallen short.
Quarterly figures show growth of 1.37% in July-September, 1.53% in October-December, and 2.4% in January-March. Hitting 2.7% for the year requires a steep 5.5% expansion in the current quarter.
“Pakistan’s economy continued growth momentum in FY2025, supported by strengthened macroeconomic fundamentals, prudent fiscal management, and improved external sector performance,” the report said. Ongoing IMF programs, including the Extended Fund Facility and Resilience and Sustainability Facility, plus upgraded credit ratings, have lifted investor sentiment.
“The ongoing IMF programs (EFF and RSF), along with upgraded credit ratings, bolstered policy credibility and investor’s sentiment,” the report added.
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