The finance ministry projects inflation at 8% for September and 9% for October, indicating positive economic developments in Pakistan.
The finance ministry recently projected that inflation in Pakistan will be 8% in September and 9% in October 2024. This information reflects the ongoing improvements in Pakistan’s economy. The ministry’s outlook highlights the positive trends in various economic indicators.
Positive Developments in Pakistan’s Economy
According to the ministry, the economy shows positive developments in the first two months of FY2025. Notably, most economic indicators are improving. Inflation rates have dropped to single digits. Additionally, industrial output has increased, and large exporting sectors are experiencing growth.
Recent Inflation Trends
In August 2024, Consumer Price Index (CPI) inflation reached 9.6%, the lowest in 34 months. This decline is significant compared to the 27.4% inflation rate from the same month last year. On a month-on-month basis, inflation increased by 0.4% in August 2024. This is a decrease from the 2.1% rise in the previous month.
Current Account Deficit and Trade Outlook
The current account deficit has contracted, contributing to a resilient fiscal sector. The finance ministry expects both exports and imports to gain momentum. In September 2024, exports are projected to be between $2.5 billion and $3.0 billion. Meanwhile, imports are expected to range from $4.5 billion to $5.0 billion, with workers’ remittances estimated at $2.7 billion to $3.2 billion.
Agricultural Sector Growth
The agricultural sector is also experiencing growth. The imports of agricultural machinery increased by 105.6% compared to the previous year. This trend indicates a commitment to innovation in farming practices, which should enhance yield in the coming months. However, urea offtake during Kharif 2024 was lower than last year due to late sowing and climate change.
Industrial Recovery and Economic Stability
After a decline, the Large Scale Manufacturing (LSM) sector is regaining its footing. Major exporting sectors are poised to scale up production. This recovery is supported by a stable exchange rate and declining inflationary pressures. Furthermore, an accommodative monetary policy will bolster sustainable industrial growth.
Fiscal Performance and Revenue Growth
In July FY2025, net federal revenues grew by 7.2%, reaching Rs 408.4 billion. This increase is due to a 22.6% rise in tax collection. The fiscal deficit recorded was 0.3% of GDP, slightly higher than the previous year. The Federal Board of Revenue (FBR) also achieved a 20.6% increase in net tax collection during July-August FY2025.
Conclusion: Finance Ministry Projects Inflation
In conclusion, the finance ministry’s projections reflect a cautiously optimistic outlook for Pakistan’s economy. As inflation is projected at 8% in September and 9% in October, these figures indicate a stabilizing economy. The positive trends in various sectors suggest a promising future for economic growth in Pakistan.
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