Inflation likely to hover around 12-13% in July: FinMin Report

July 30, 2024 (MLN): Inflation is projected to hover around 12-13% in July 2024, with expectations of a decrease to 11-12% by August 2024, according to the Finance Ministry's monthly economic report.

In June 2024, CPI inflation reached the cusp of the single-digit range, the report noted.

Pakistan's economy moved towards stability in FY2024 with decreasing infation, a surplus in the primary fscal account (Jul-May), a negligible current account deficit, and a stable exchange rate.

In the real sector, agriculture outperformed, whereas large-scale manufacturing is set to take off.

The external account position improved due to contained imports resulting from prudent fscal and monetary management, while exports and remittances increased signifcantly.

To further strengthen stability, government has recently reached a stafflevel agreement with IMF on a 37-month Extended Fund Facility Arrangement (EFF) for $7 billion.

The agriculture sector growth target is set at 2% 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.

Furthermore, livestock, fishery, and forestry are projected to continue on the growing trajectory due to favourable and encouraging environment, the report noted.

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 $2.4-2.7bn and $4.5-4.9bn, 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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