The Ministry of Finance has released its Monthly Economic Update & Outlook Report, highlighting notable economic improvements in the first seven months of the current fiscal year. While the report reflects growth in exports and foreign direct investment (FDI), declining inflation, and enhanced financial stability, it also warns of a potential rise in inflation during Ramadan.
Key Economic Indicators
The report outlines positive trends, including the expansion of export industries, easing inflation, and financial stability driven by policy rate cuts and a surge in remittances. From July to January, remittances rose by 31.7% to $20.84 billion, with further growth expected during Ramadan, Eidul Fitr, and Eidul Adha. The total remittance volume is projected to reach a record $35 billion by June.
Other key economic highlights include:
- Foreign Direct Investment (FDI): Increased by 56% to $1.52 billion.
- Exports: Grew by 7.6% to $19.17 billion.
- Current Account: Maintained a $682 million surplus.
- Foreign Exchange Reserves: Rose to $15.94 billion, with $8.058 billion held by the State Bank of Pakistan (SBP).
- Primary Surplus: Increased by 98.9% to Rs3,603 billion.
- Fiscal Deficit: Declined by 36% to Rs1,537 billion.
- Non-Tax Revenue: Jumped by 82% to Rs3,602 billion.
- FBR Revenue: Grew by 26.2% to Rs6,497 billion.
Inflation Concerns Amid Economic Gains
Despite these positive trends, the Finance Ministry cautions that inflation may rise during Ramadan due to increased demand. Inflation, estimated at 2-3% in February, could climb to 3-4% in March as the holy month approaches.
Meanwhile, large-scale manufacturing (LSM) is expected to shift from negative to positive growth in the coming months, after experiencing a 3.73% decline from July to January.
However, low rainfall remains a concern for the Rabi crop, particularly wheat production, making agricultural sector targets highly dependent on weather conditions.