The growth prospects for Pakistan are expected to remain encouraging during the upcoming fiscal year 2024-25 as the government’s focus on key sectors is expected to propel the country onto a trajectory of sustained growth, according to a recent report released by the Finance Ministry on here Friday.
“Pakistan’s growth prospects are expected to remain encouraging. Budget FY2025 is gearing towards a shift to an era of sustainable and inclusive growth,” said the Monthly Economic Update and Outlook for June released by the ministry.
Aiming to this, the government is focusing on high-potential sectors like Information Technology (IT), Small and Medium Entrepreneurs (SMEs), mines and minerals, tourism, exports and agriculture, it said.
“These sectors can pay rich dividends and lend support to the country’s balance of payments position. Complementing this, fiscal discipline, effective implementation of home-grown growth program along with bilateral and multilateral cooperation will necessitate the sustainable potential growth path in coming years,” the report maintained.
The monthly update says that fiscal year 2023-24 was going to end with an economic stabilisation path accompanied by improved macroeconomic indicators.
“The subsiding inflationary pressures, stability in external accounts and exchange rate, fiscal consolidation and gradual recovery in industrial activities are restoring the confidence of economic agents thus facilitating economic growth,” it said.
Highlighting the performance of various economic indicators, the report said, the inflation outlook for June 2024 has slightly increased compared to the previous month but remains well below the levels of the same month last year. This rise is primarily due to higher prices of perishable items driven by Eid ul Azha. The Consumer Price Index (CPI) based inflation recorded at 11.8 per cent on a year-on-year (YoY) basis in May 2024 as compared to 17.3 per cent in the previous month and 38.0 per cent in May 2023. During July-May FY 2024, CPI stood at 24.5 per cent against 29.2 per cent last year.
On the revenue side, the reports said, during July-April FY2024, net federal revenues grew by 51 per cent to reach Rs.5627.5 billion against Rs.3715.3 billion last year. During 2023-24, the agriculture sector has shown promising performance as it grew by 6.3 per cent driven by favourable weather conditions, increased crop yields, and government initiatives aimed at boosting agricultural productivity.
As anticipated, LSM witnessed a moderate growth of 0.45 per cent during Jul-Apr FY2024. This turnaround is likely to continue in upcoming months on the back of stimulated external demand, improved business confidence, and removal of import restrictions.
The current account posted a deficit of $ 0.5 billion during Jul-May FY2024 as against a deficit of $ 3.8 billion last year, largely reflecting an improvement in trade balance. Total foreign investment during Jul-May FY2024 recorded an inflow of $ 1.2 billion as against an inflow of $ 0.5 billion last year. Foreign direct investment (FDI) stood at $ 1.7 billion ($ 1.5 billion last year) increasing by 14.9 per cent. In May 2024, FDI witnessed an increase of 73.9 per cent of $ 270.9 million as against an inflow of $ 155.7 million last year.
FDI received from China $ 521.2 million (30.1% share), Hong Kong $ 322.0 million (18.6 %), UK $ 243.6 million (14.1%), US $ 127.8 million (7.4%), and Saudi Arabia $ 75.4 million (4.4%). The power sector attracted the highest FDI of $ 742.5 million (42.9% of total FDI), Oil & Gas exploration of $ 277.3 million (16.0%), and Financial Business of $ 187.6 million (10.9%).