By Staff Reporter
ISLAMABAD The finance ministry said on Tuesday that inflation is expected to range between 12.0 percent-13.0 percent in July 2024 and 11.0 percent-12.0 percent in August 2024, as the country’s economy moves towards stability.
“Pakistan’s economy moved towards stability in FY2024 with decreasing inflation, a surplus in the primary fiscal account, a negligible current account deficit, and a stable exchange rate,” the ministry said in its monthly economic outlook.
The ministry said the country’s consumer price index (CPI) inflation reached reached the cusp of the single-digit range. The consumer inflation reached 12.6 percent in June 2024, down from 29.4 percent in June 2023. The average annual inflation fell to 23.4 percent in FY2024 from 29.2 percent last year.
The ministry attributed the decline in inflation to prudent fiscal and monetary management, which led to contained imports and increased exports and remittances.
To further strengthen stability, the government has recently reached a staff-level agreement with the International Monetary Fund (IMF) on a 37-month Extended Fund Facility Arrangement (EFF) for $7 billion.
The ministry said the fiscal deficit was reduced to 4.9 percent of GDP in Jul-May FY2024, from 5.5 percent last year, while the primary balance showed a surplus of Rs1,620.5 billion (1.5 percent of GDP) during Jul-May FY2024.
Net federal revenues reached Rs6,202.6 billion, a 49.0 percent increase from the previous year, driven by tax and non-tax collections.
The external account position also improved, with the current account deficit shrinking to $0.7 billion compared to $3.3 billion last year. Goods exports increased by 11.5 percent, reaching $31.1 billion, while imports remained at $53.2 billion.
Foreign Direct Investment (FDI) stood at $1.9 billion, 16.9 percent up from the previous year, while workers’ remittances reached $30.3 billion in FY2024, a 10.7 percent increase.
Pakistan’s total liquid foreign exchange reserves were recorded at $14.7 billion on July 12, 2024, with the State Bank of Pakistan’s reserves at $9.4 billion.
The ministry said the agriculture sector growth target is set at 2 percent for FY2025. “Due to a high base in the previous year, important and other crops are projected to keep a reasonable good pace of growth in 2024-25,” it added.
“Furthermore, livestock, fishery, and forestry are projected to continue on the growing trajectory due to favourable and encouraging environment.”
The recovery that began in the LSM will likely continue throughout FY2025, driven by a stable exchange rate, macroeconomic stability, and relaxed import restrictions. It is expected that exports and imports will continue to observe an increasing trend and will remain within the range of $2.4-2.7 billion and $4.5-4.9 billion, respectively, in July 2024.
“Revived domestic economic activities, better agriculture output, stable exchange rate, improved foreign demand, and low global commodity prices will remain instrumental for external sector stability.”
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