Islamabad September 29 2024: Pakistan’s economy is indicating positive developments during the first two months of FY2025 as most of the economic indicators have shown improvement, according to ministry of finance monthly report.
Inflation has dropped to single digit, industrial output has increased, and large exporting sectors have witnessed growth, reflecting an optimistic outlook for exports. The current account deficit contracted, while the fiscal sector remained resilient, mainly attributed to prudent measures. This trajectory is expected to continue in the coming months.
Inflation is expected to remain within the range of 8.0 percent to 9.0 percent in September and October 2024. On external front, it is expected that exports and imports will observe an increase in momentum. In September 2024, the exports are likely to remain within range of USD 2.5-3.0 billion, imports USD 4.5-5.0 billion and workers’ remittances USD 2.7-3.2 billion.
During FY2025 (July-August), imports of agricultural machinery & implements increased by 105.6 percent to $17.6 million compared to the same period last year. This growing commitment to mechanization and innovation in farming practices is expected to enhance yield in coming months. Urea offtake during Kharif 2024 (Apr-Aug) recorded at 2,381 thousand tonnes, 13.6 percent less than Kharif 2023 and DAP offtake decreased by 21.9 percent compared to Kharif2023. The decline may be attributed to late sowing of Kharif crops as a result of climate change, lower prices of wheat and reduction in cotton acreage.
LSM output increased by 2.4 percent in July 2024, rebounding from a contraction of 5.4 percent in July 2023, reflecting improved market conditions and policy support. During the period, 14 out of 22 sectoPKR witnessed positive growth which includes, Textile, Food, Beverages, Wearing Apparel, Coke & Petroleum Products, Chemicals, Automobiles and Paper & Board. Textile, with the largest weight in LSM (18.2), turned positive after 24 months. Additionally, production and sales of all vehicles witnessed an increase of 19.5 percent and 16.3 percent respectively during Jul-Aug FY2025, of which CaPKR production increased by 15.0 percent and Trucks & Buses by 120.4 percent whereas Tractor production showed a decline of 26.9 percent. Total cement dispatches recorded 6.4 million tonnes during Jul-Aug FY2025, reflecting a 17.8 percent decline compared to the same period last year. Domestic dispatches were 5.2 million tonnes, down 20.7 percent from 6.6 million tonnes last year, while exports witnessed a slight dip of 1.6 percent, falling from 1.18 million tonnes to 1.16 million tonnes.
CPI inflation receded to single digit, lowest in 34 months in August 2024, recorded at 9.6 percent on year-on-year basis compared to 27.4 percent in the same month last year.
In July FY2025, the net federal revenues grew by 7.2 percent to PKR 408.4 billion from PKR 380.9 billion last year. The growth in revenues has been realized on the back of 22.6 percent increase in tax collection and 20.5 percent rise in non-tax collection. The main contributor of non-tax revenues was the petroleum levy which surged to PKR 83.6 billion. Total expenditures grew by 19.2 percent to PKR 768.6 billion in July FY2025 against PKR 644.9 billion last year. Consequently, the fiscal defifcit recorded at 0.3 percent of GDP as against 0.2 percent of GDP in the same month of last year.
During Jul-Aug FY2025, the current account registered a deficit of USD 0.2 billion compared to USD 0.9 billion last year however, it recorded a surplus of USD 75 million in August 2024. During Jul-Aug FY2025, goods exports increased by 7.2 percent, reaching USD 4.9 billion, while imports stood at USD 9.5 billion, compared to USD 8.4 billion last year leading to a trade deficit of USD 4.7 billion.
