The Finance Ministry of Pakistan forecasts that the country’s headline inflation will continue to decelerate over the next two months (September-October), stabilizing between 8-9%. According to the Ministry’s Monthly Economic Update and Outlook for September, the Consumer Price Index (CPI) has fallen to its lowest level in 34 months, with inflation recorded at 9.6% in August 2024, a significant decrease from 27.4% during the same period in 2023. The ministry expects further declines in the near term.
In its report, the Finance Ministry noted positive trends for Pakistan’s economy during the first two months of FY2025, with improvements in industrial output, export growth, and a reduction in the current account deficit. It attributed this progress to prudent fiscal measures and a favorable external environment.
Large-Scale Manufacturing (LSM) also showed signs of recovery after a previous decline, with output increasing by 2.4% in July 2024, following a contraction of 5.4% in July 2023. Key sectors such as textiles, food, chemicals, and automobiles experienced growth, with 14 out of 22 industries recording positive performance.
On the agricultural front, the report highlighted a growing commitment to mechanization, with imports of agricultural machinery rising by 105.6% in July-August 2024. However, challenges such as late sowing due to climate change impacted urea and DAP offtake during the Kharif season.
On the external front, the ministry projected that exports in September 2024 would reach between $2.5-3.0 billion, while imports are expected to range from $4.5-5.0 billion, with workers’ remittances forecast at $2.7-3.2 billion.
