Pakistan’s economy begins FY25 on high note with inflation drop, fiscal resilience

Pakistan’s economy has shown significant positive developments going into the fiscal year 2024-25 as recent data reflects a favourable shift in several key economic indicators, providing optimism for the months ahead.

According to the data released by the Ministry of Finance in its monthly outlook for August, as of July 2024, Consumer Price Index (CPI) inflation has decreased to its lowest level in 32 months, recording 11.1% year-on-year (YoY) compared to 12.6% in the previous month and 28.3% in July 2023. This decline suggests a promising trend towards achieving single-digit inflation in the coming months. 

The fiscal sector also demonstrated resilience, with the government managing to reduce the fiscal deficit to 6.8% of GDP in FY24 from 7.8% the previous year. A surplus in the primary balance of 0.9% of GDP was reported, contrasting with a deficit of 1.0% in FY23. The total revenues saw a substantial increase of 38%, driven by a notable rise in both tax and non-tax collections in FY24.