ISLAMABAD: The administration voiced “cautious optimism” on Wednesday over a lasting economic recovery and a further slowdown in inflation, while also expressing concerns over cotton production and conflicting signals from the manufacturing sector.
In its Monthly Economic Update and Outlook for October, the Ministry of Finance (MoF) stated that inflation will stay between 6 and 7 percent in October and then drop to 5.5 to 6.5 percent in November.
It stated that during the first quarter of FY25, the nation’s economy showed a sustained rebound. When announcing the first tranche of $1.03 billion under the International Monetary Fund’s Extended Fund Facility (EFF) program, the MoF stated, “Stability in both the fiscal and external sectors has been maintained, supported by significant financial inflows.”
October inflation is predicted to reach 6-7 percent; the main worry is the decline in cotton production.
The first quarter (July-September) of the current fiscal year had $2.3 billion in foreign assistance inflows, down 60% from roughly $5.73 billion in the same period last year, according to a report released by the Ministry of Economic Affairs a day earlier.
The MoF predicted that the successful hosting of the SCO summit in Pakistan would open the door for business and market confidence, and that the approval of the IMF program strengthened macroeconomic stability.
Although the report acknowledged that cotton production was still a cause for worry, it expressed optimism that the agricultural sector’s drive toward mechanization and improved resource management would provide a bright future for FY25. It claimed that a 116 percent increase in the import of agricultural machinery to $29.7 million in the first quarter demonstrated how the agriculture industry profited from mechanization-based productivity.
During Kharif, the MoF verified a 15 percent drop in DAP fertilizer and a 17 percent drop in urea offtake. However, it stated that because water availability remained adequate, overall fertilizer production rose 3.7 percent year over year to 2.45 million tons during July-September FY25. In July and August of FY25, there was a 22.8 percent rise in wheat thresher production compared to the previous year. According to the MoF, “all of these factors will positively impact the growth of the agriculture sector.”
“Large-scale manufacturing (LSM) continues to show mixed signals, with YoY growth remaining negative, yet MoM growth indicating signs of recovery,” the MoF stated, adding that important sectors were starting to ramp up production and that industrial output was progressively stabilizing.
