Pakistan’s finance ministry forecast inflation at 6-7% in October

Inflation in Pakistan for October is expected to range between 6% and 7%, with a further decrease to 5.5% to 6.5% in November, marking the lowest level in nearly 44 months.

This forecast comes as industrial output shows signs of gradual stabilization, according to the Economic Update and Outlook for October released by the Pakistan Finance Ministry on Wednesday.

The report indicates that Large Scale Manufacturing (LSM) continues to show mixed signals, with year-on-year growth remaining negative, but monthly growth showing signs of recovery.

The ministry expects that the economic recovery will benefit from declining inflation and ongoing fiscal consolidation in the coming months.

Key sectors are beginning to ramp up production, contributing to the gradual stabilization of industrial output.

Despite ongoing challenges, particularly in the domestic market, the outlook remains cautiously optimistic.

Positive monthly growth suggests that economic momentum could build in the coming months, supported by a favorable economic environment both domestically and externally.

In the agricultural sector, cotton production remains a concern. However, the sector's move toward mechanization and better resource management offers a promising outlook for FY2025.

This aligns with the government's broader vision of promoting sustainable agricultural growth through technological advancements.

The external sector showed stability during the first quarter of FY2025, with imports increasing reasonably and providing impetus for economic recovery. The finance ministry anticipates that in October 2024, exports will be between $2.5 billion to $2.8 billion, imports will range from $4.5 billion to $4.9 billion, and worker's remittances will be between $2.8 billion to $3.3 billion.

Pakistan's economy has demonstrated sustained recovery during the first quarter of FY2025, maintaining stability in both the fiscal and external sectors, supported by significant financial inflows.

The country received the first tranche of $1.03 billion under the IMF Extended Fund Facility (EFF) program, reinforcing macroeconomic stability. Additionally, the successful hosting of the SCO summit in 2024 has bolstered business and market confidence.

The finance ministry concludes that, given these positive developments, Pakistan's economy is expected to continue its sustainable recovery in the coming months.