Pakistan’s average inflation to remain between 5.5-7.5% during FY25— central bank

A labour carries water bottles on a hand cart past the Pakistan Stock Exchange (PSX) building as index plummeted amid a global market crash, in Karachi on April 7, 2025. (AFP)
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Updated 29 April 2025
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Pakistan’s average inflation to remain between 5.5-7.5% during FY25— central bank

  • Pakistan’s real GDP growth rate expected to hover between 2.5-3.5%, says State Bank of Pakistan 
  • Central bank says “strong momentum” in remittances, exports to continue outpacing increase in imports 

ISLAMABAD: Pakistan’s average inflation is expected to remain in the 5.5-7.5% range in the fiscal year ending June 2025, the country’s central bank said in its half-yearly economic report this week, stating that its real GDP growth is expected to hover between 2.5-3.5%.

Pakistan’s economy has improved in recent months, supported by declining inflation, which caused the central bank to reduce its policy rate to 12% after a series of cuts totaling 1,000 basis points since June 2024.

In a report titled “The State of Pakistan’s Economy, Half Year Report FY25” released on Monday, the State Bank of Pakistan (SBP) noted that inflationary pressures have receded notably, with headline inflation reaching a multi-decade low of 0.7% by March 2025.

“In view of steeper-than-anticipated disinflation, combined with an adequately tight monetary policy stance, continued fiscal consolidation and an ease in global commodity prices, the SBP projects average inflation for FY25 to fall in the range of 5.5–7.5 percent,” the SBP said in a press release.

Pakistan’s inflation rate rose to a record high of 38% in May 2023 on account of surging food and fuel costs. This was caused by Islamabad’s move to withdraw energy and fuel subsidies under a deal agreed with the International Monetary Fund in exchange for a financial bailout package.

The report said Pakistan’s current account balance is projected to remain in the range of -0.5 to 0.5 percent of the GDP. The central bank said it expects a “strong momentum” in foreign remittances and exports to continue outpacing the increase in imports. 

“This is expected to cushion against lower financial inflows and help strengthen external buffers,” the report said. “The SBP’s projection for real GDP growth remains unchanged in the range of 2.5–3.5 percent.”

The report highlighted downside risks in the form of additional fiscal consolidation and less-than-expected wheat harvests. It pointed out risks to the medium-term outlook, largely stemming from global trade disruptions and related commodity price volatility in light of Washington’s tariffs, changing geo-political situations, adjustments in administered energy prices and spillover of movements in international currencies on the local currency. 


Pakistan, other Muslim states raise alarm over Gaza situation after heavy flooding

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Pakistan, other Muslim states raise alarm over Gaza situation after heavy flooding

  • Cold winter rains have repeatedly lashed the sprawling tent cities, turning Gaza’s dirt roads into mud and causing damaged buildings to collapse
  • The situation has been compounded by lack of sufficient humanitarian access, acute shortages of essential life-saving supplies and materials

ISLAMABAD: Foreign ministers of Pakistan, Saudi Arabia and other Muslim nations on Friday voiced concern over the situation in Gaza, following severe flooding triggered by heavy rains in the territory.

As 2026 begins, the shaky 12-week-old ceasefire between Israel and Hamas has largely ended large-scale Israeli bombardment of Gaza. But Palestinians are still being killed almost daily by Israeli fire, and the humanitarian crisis shows no signs of abating.

Cold winter rains have repeatedly lashed the sprawling tent cities over past weeks, turning Gaza’s dirt roads into mud and causing buildings damaged in Israeli bombardment to collapse. UNICEF says at least six children have now died of weather-related causes.

In a joint message, foreign ministers of Pakistan, Saudi Arabia, Egypt, Indonesia, Jordan, Qatar, Türkiye, the United Arab Emirates, expressed their “deepest concern” over the situation, compounded by lack of sufficient humanitarian access, acute shortages of essential life-saving supplies, and the slow pace of the entry of essential materials required for the rehabilitation of basic services.

“The ministers highlighted that the severe weather has laid bare the fragility of existing humanitarian conditions, particularly for almost 1.9 million people and displaced families living in inadequate shelters,” the Pakistani foreign ministry said in a joint statement.

“Flooded camps, damaged tents, the collapse of damaged buildings, and exposure to cold temperatures coupled with malnutrition, have significantly heightened risks to civilian lives, including due to disease outbreaks, especially among children, women, the elderly, and individuals with medical vulnerabilities.”

The statement came a day after UNICEF said a 7-year-old, Ata Mai, had drowned Saturday in severe flooding that engulfed his tent camp in Gaza City. Mai had been living with his younger siblings and family in a camp of around 40 tents.

They lost their mother earlier in the war, according to the UN agency.

Video from Civil Defense teams, shown on Al Jazeera, showed rescue workers trying to get Mai’s body out of what appeared to be a pit filled with muddy water surrounded by wreckage of bombed buildings. The men waded into the water, pulling at the boy’s ankle, the only part of his body visible. Later, the body is shown wrapped in a muddy cloth being loaded into an ambulance.

Foreign minister of Pakistan, Saudi Arabia and other states appreciated the efforts of all United Nations (UN) organizations and agencies as well as non-government organizations (NGOs) in continuing to assist Palestinian civilians and deliver humanitarian assistance under extremely difficult and complex circumstances.

“They demanded that Israel ensure the UN and international NGOs are able to operate in Gaza and the West Bank in a sustained, predictable, and unrestricted manner, given their integral role in the humanitarian response in the Strip. Any attempt to impede their ability to operate is unacceptable,” the statement read.

The foreign ministers reaffirmed support to President Donald Trump’s plan for Gaza, with a view to ensuring the sustainability of the ceasefire, bringing an end to the war in Gaza, to secure a dignified life for the Palestinian people who have endured prolonged humanitarian suffering, and leading to a credible pathway to Palestinian self-determination and statehood.

“In this context, they stressed the urgent need to immediately initiate and scale up early recovery efforts, including the provision of durable and dignified shelter to protect the population from the severe winter conditions,” the statement read further.

“The ministers called on the international community to uphold its legal and moral responsibilities and to pressure Israel, as the occupying power, to immediately lift constraints on the entry and distribution of essential supplies including tents, shelter materials, medical assistance, clean water, fuel, and sanitation support.”