ISLAMABAD: Pakistan’s finance ministry said on Tuesday the country’s economy was showing signs of recovery, highlighting a downward inflationary trend that could reach 17.5 percent in the upcoming month of May.
The statement comes at a time when Pakistan received a disbursement of $1.1 billion from the International Monetary Fund (IMF) as the second and final tranche under a $3 billion standby arrangement secured last summer to avert a sovereign default.
Prime Minister Shehbaz Sharif said earlier in the day the money would help the country achieve greater economic stability, with his government striving for a bigger loan program for a longer duration.
The finance ministry said in its Monthly Economic Update and Outlook for April 2024 that the economy was “on a resilient track to achieve modest growth this year, setting the basis for better performance in the upcoming fiscal year.”
“Headline inflation observed the lowest reading after 21 months,” it noted. “In March, CPI [consumer price index] inflation recorded the third consecutive YoY [year-on-year] decline, dropping to 20.7 percent from 35.4 percent last year. This decrease was observed throughout the third quarter of FY2024.”
It added the inflation outlook for April 2024 continued a downward trajectory, with the government determined to reduce it by taking strict administrative measures.
The outlook report said the increasing crude oil prices in the international market had prompted the government to raise domestic fuel prices. However, the rise in these rates was expected to be offset by the government initiative to reduce wheat flour prices.
“Inflation is projected to hover around 18.519.5 percent in April 2024,” it continued. “However, there are expectations of a gradual easing further to 17.5-18.5 percent in May 2024.”
Pakistan’s economy witnessed a major inflationary pressure in recent years after its governments sought IMF assistance amid dwindling foreign currency reserves and depreciating national currency.
The international lender urged the country to carry out economic reforms – such as removal of subsidies and increase in fuel charges and power tariffs – which led to spiraling inflation and pushed about 40 percent of its population below the poverty line.
Last year in February, financial experts warned of spiraling inflation of up to 40 percent after official data revealed that weekly inflation had touched 38.4 percent on an annual basis.
However, the situation has gradually improved, though inflationary pressure still continues to remain on the higher side.
Pakistan says inflation expected to drop to 17.5 percent in May amid signs of economic recovery
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Pakistan says inflation expected to drop to 17.5 percent in May amid signs of economic recovery
- Finance ministry says Pakistan to achieve modest growth this year, enabling improved performance in the next fiscal
- It acknowledges higher fuel prices, saying they will be offset by the government’s initiative to reduce wheat flour prices
Pakistan’s annual inflation rises to 7% in February, statistics bureau says
- Pakistan’s stock exchange halted trading on Monday after falling more than 5 percent due to the volatility
- IMF has urged policymakers to remain data-dependent to anchor inflation expectations, rebuild buffers
ISLAMABAD: Pakistan’s annual inflation rate rose to 7 percent year-on-year in February, the statistics bureau said on Monday, with fears of commodity prices volatility after US and Israel strikes in Iran.
The consumer price index of annual inflation jumped from 5.8 percent the previous month, the bureau said.
On a month-on-month basis, inflation increased by 0.3 percent in February, down from a 0.4 percent rise the previous month.
Pakistan’s stock exchange halted trading on Monday after falling more than 5 percent due to the volatility.
The central bank, which held its policy rate at 10.50 percent in January, has said inflation could exceed its 5 percent to 7 percent medium-term target range for a few months this year, even as growth gains momentum and imports push the trade deficit wider.
The International Monetary Fund, which has cautioned against premature monetary easing under Pakistan’s $7 billion loan program, has urged policymakers to remain data-dependent to anchor inflation expectations and rebuild external buffers.
An IMF mission has started discussions with Pakistani authorities on the third review of the country’s Extended Fund Facility and the second review of its Resilience and Sustainability Facility.
