ISLAMABAD, Oct 30 :In the wake of positive developments, the country’s economy will continue to observe sustainable recovery in the coming months as it has demonstrated sustained recovery during first quarter of Fiscal Year 2024-25, finance ministry said in a report released here Wednesday.
According to monthly Economic Update and Outlook for October 2024, the economy showed constant recovery during first quarter and stability in both, the fiscal and external sectors, has been maintained, supported by significant financial inflows.
Pakistan has received first tranche of US$ 1.03 billion under International Monetary Fund (IMF) Extended Fund Facility (EFF) programme, reinforcing macroeconomic stability. Moreover, successful hosting of SCO summit 2024 in Pakistan are paving the way for business and market confidence, it says.
According to report, the agricultural sector is benefiting from mechanization-based productivity. During FY2025 (Jul-Sep), imports of agricultural machinery increased by 115.9 percent to $29.7 million. Urea offtake during Kharif 2024 recorded at 2,746 thousand tonnes while DAP offtake stood at 642 thousand tonnes.
Overall fertilizer production during Jul-Sep FY2025 increased by 3.7 percent to 2.45 million tons compared to last year. During Kharif-2024, water availability remained satisfactory During Jul-Aug FY2025, the production of wheat threshers increased by 22.8 percent compared to last year. All these factors will positively impact the growth of agriculture sector.
Meanwhile, Large-Scale Manufacturing (LSM) on MoM basis observed a substantial growth of 4.7 percent in August 2024, reflecting the revival of economic activities. However, it has observed a slight dip of 0.2 percent during Jul-Aug FY2025, compared to 2.5 percent contraction in last year.
On the other hand, the Consumer Price Index (CPI) based inflation has been on a consistent decline, reaching 44 months low in September. During Jul-September FY2025, CPI Inflation stood at 9.2% while it was 29.0% in the same period last year. YoY CPI Inflation in September 2024 was recorded at 6.9% – lowest level in 44 months, compared to 9.6% percent in the previous month and 31.4 percent in September 2023.
During Jul-Aug FY2025, the net federal revenues grew by 20.8 percent to Rs 986.7 billion from Rs 816.6 billion same period last year. Both tax and non-tax revenues increased by 20.8 percent and 20.6 percent, respectively.
On the other side, the total expenditures grew by 3.1 percent to Rs 1,635.5 billion during Jul-Aug FY2025 against Rs 1,585.7 billion last year. The markup expenditure declined by 6.3 percent owing to the gradual decline in the policy rate. Consequently, the fiscal deficit reduced to 0.7 percent of GDP as against 0.8 percent of GDP last year. Additionally, the primary balance recorded a surplus of 0.05 percent of GDP,
During Jul-Sep FY2025, the FBR net tax collection grew by 25.5 percent to Rs 2,562.9 billion as compared to Rs 2,041.5 billion same period last year. In September 2024, FBR collected 32.7 percent more taxes to reach Rs 1,107 billion from Rs 834 billion in September 2023.
The external account position improved due to notable increase in exports and remittances notwithstanding increase in imports. During JulSep FY2025, the current account deficit shrank to $ 0.1 billion compared to $ 1.2 billion last year.
However, current account recorded surplus for the second consecutive month in September 2024. During Jul-Sep FY2025, goods exports increased by 7.8 percent, reaching $ 7.5 billion, while imports recorded at $ 14.2 billion, compared to $ 12.3 billion in last year (15.7% increase). This has led to trade deficit of $ 6.7 billion, up from $ 5.3 billion last year.
During 1 July – 30 September, FY2025 money supply (M2) showed negative growth of 0.8 percent (Rs. -290.0 billion) compared to growth of 0.01 percent (Rs. 1.9 billion) last year.
In September 2024, the KSE-100 index continued its bullish trend and closed at 81,114 points at month end. During the month, the KSE-100 index gained 2,626 points, while market capitalization increased by Rs 134 billion to settle at Rs 10,619 billion.
Social safety nets have been further enhanced to reach deprived segments of society. In September 2024, PPAF disbursed 24,913 interest-free loans amounting to Rs 1.2 billion.
Highlighting the economic outlook, the report says, LSM continues to show mixed signals, with YoY growth remaining negative, yet MoM growth indicating signs of recovery.
Industrial output is gradually stabilizing, and key sectors are beginning to ramp up production. Although challenges persist, particularly in the domestic market, the outlook remains cautiously optimistic.
The positive monthly growth suggests momentum could gather in the coming months, supported by a favorable economic environment at both domestic and external fronts.
The report says, economic recovery will take advantage of declining inflation and continuation of fiscal consolidation in coming months. It is expected that inflation will remain within range of 6-7% in October and further down to 5.5 – 6.5% by November 2024.
On the agriculture front, although the cotton production remains a concern, the sector’s push toward mechanization and better resource management offers a promising outlook for FY2025.
This trend aligns with the government’s broader vision of promoting sustainable agricultural growth through technological advancement.
External sector stability sustained during Q1 FY2025. Imports are reasonably increasing and providing impetus to economic recovery. Based on the currently observed trend, it is anticipated that in October 2024, the exports will remain within range of $2.5-2.8 billion, imports $4.5-4.9 billion and worker’s remittances $ 2.8-3.3 billion.
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