ISLAMABAD: In a recent report released by the Finance Division, the economic outlook for Pakistan is showing signs of improvement, with key sectors demonstrating resilience amidst various challenges.
The report, covering the month of April 2024, highlights significant developments across agriculture, manufacturing, inflation, fiscal management and the external sector.
Pakistan’s agriculture sector has emerged as a significant driver of economic growth, witnessing a robust expansion of 5.02% compared to the previous year. The increase in agriculture credit allocations and timely loans for farmers have played a vital role in this growth. Notable increases in production have been observed in crops such as cotton, rice, and maize, contributing positively to food security.
While the large-scale manufacturing sector experienced a slight decline of 0.5%, certain industries such as food, beverages, and pharmaceuticals showed positive growth. The auto industry, however, faced challenges due to increased input prices and tightened auto finance, resulting in decreased production and sales of cars and trucks.
The Consumer Price Index (CPI) inflation witnessed a downward trend, marking the third consecutive decline to 20.7% year-on-year in March 2024. Various factors, including perishable food items and housing costs, contributed to the inflationary pressures.
The fiscal performance demonstrated positive growth, with the net federal revenue increasing by 51% compared to the previous year. Tax collection surpassed targets, driven by effective tax administration and compliance measures. However, the widening fiscal deficit remains a challenge, primarily due to increased current expenditures, notably mark-up payments.
In the external sector, Pakistan’s current account posted a deficit of $0.5 billion for July-March FY24, showing improvement compared to the previous year. Exports increased by 9.3%, while imports declined by 8.0%, resulting in a narrowed trade deficit. Remittances remained steady, contributing to a surplus in the current account.
The positive momentum in key indicators, coupled with prudent fiscal management, lays a strong basis for better growth prospects in Pakistan. The government’s measures to improve various sectors are poised to navigate challenges and lead the economy towards higher and sustainable growth. –INP
