Inflation Declines and Rupee Strengthens: Ministry of Finance Reports Economic Progress

Islamabad: During the first two months of the fiscal year 2024-25 (July and August), Pakistan has witnessed a significant decline in inflation and an increase in the value of the rupee, according to a report released by the Ministry of Finance. Inflation decreased from 23.4% to 9.6%, while remittances, exports, imports, and foreign investments all showed positive growth.
The report indicates that the economy has made notable progress, with improvements in industrial production and exports, a reduction in the current account deficit, and a strengthening financial sector. The Ministry expressed optimism about sustained economic stability, attributing this positive trend to sound policy measures.
Key highlights from the report include a 7.2% increase in exports and a 13.8% rise in imports. The current account deficit saw a remarkable 80.9% decrease in the same period. Despite the positive economic indicators, the fiscal deficit increased from PKR 225 billion to PKR 387 billion.
In agricultural sector developments, imports of agricultural machinery surged by 105.6%, reaching $17.6 million. This growth is expected to enhance productivity through mechanization and modern farming techniques in the coming months.
The report also noted a decline in sales of urea and DAP fertilizers due to adverse weather conditions and lower wheat prices, leading to potential delays in the sowing of Kharif crops. Additionally, the Large Scale Manufacturing (LSM) sector reported a 2.4% increase in production in July 2024, following a 5.4% decline in July 2023.
Among the 22 sectors, 14 showed positive growth, particularly in textiles, food, beverages, chemicals, and vehicles. The automotive sector experienced a 19.5% rise in production and a 16.3% increase in sales, although tractor production fell by 26.9%. Cement deliveries reached 6.4 million tons during the first two months.
Overall, the report paints a picture of a recovering economy with several encouraging signs amid ongoing challenges.