- Inflation is expected to decline to 5.6%-6.5% by December.
- PBS data shows inflation fell to 7.2% in October.
- The LSM sector seems to be struggling to bounce back.
Inflation is expected to slow to 5.8%-6.8% in November, then again to 5.6%-6.5% in December, the Finance Ministry announced on Wednesday in its monthly economic report.
“Inflation is expected…to decline further to 5.6% – 6.5% by December 2024,” the Finance Division said in its Monthly Economic Update and Outlook.
The central bank cut interest rates by 250 basis points in early November in a bid to revive a sluggish economy amid a sharp decline in the inflation rate.
According to data from the Pakistan Bureau of Statistics (PBS), inflation fell sharply to 7.2% in October, after reaching a peak of almost 40% in May 2023, when it was slightly above 6, 9% in September 2024.
“On the agricultural level, wheat sowing is underway to reach the targeted area and production. Government facilities are intact with regard to timely supply of key inputs to farmers at reasonable prices,” the report said.
The large-scale manufacturing (LSM) sector appears to be struggling to rebound.
Although year-on-year growth remained negative, monthly performance showed signs of resilience, with production gradually increasing in key sectors such as textiles and automobiles.
The financial division said it was adamant about extending its policy support to the sector, adding that external stability would provide a springboard for sustained improvement, hinting at cautiously optimistic prospects for a gradual recovery.
The report also highlights that the current account recorded a surplus in the first four months of fiscal 2025, thereby strengthening the external sector.
“As for the outlook, it is expected that exports, imports and workers’ remittances will continue to observe their upward trend – exports will remain in the range of 2.5 to 3.0 billion dollars, imports of $4.5 billion to $4.9 billion, and worker remittances of $2.8 billion to $3.3 billion in November 2024,” according to the monthly economic outlook.