ISLAMABAD (PEN) : Pakistan’s inflation rate is projected to remain within a manageable range of *3% to 4% in June 2025, while the economy posted a **2.68% real GDP growth* for the fiscal year, according to the Ministry of Finance’s latest Monthly Economic Outlook.
The report reflects steady economic performance, with improvements noted in fiscal stability and external accounts, despite lingering structural and investment challenges.
External Position Strengthens with Surplus in Current Account
Pakistan recorded a *\$1.81 billion current account surplus* in FY25, supported by a strong rise in *workers’ remittances, which increased by **28.8%, reaching nearly *\$35 billion*—up from *\$27 billion** in the previous fiscal year. This helped stabilize the exchange rate and bolster foreign reserves.
While *exports* showed annual growth, a month-on-month dip was recorded in May 2025, declining to *\$2.4 billion* from over *\$3 billion* in May 2024. Imports increased by *11.5%*, reflecting improved industrial demand for capital and intermediate goods.
Policy Support and IMF Program Drive Stabilization
The report credited gains in investor confidence and macroeconomic stability to reforms under the *Extended Fund Facility (EFF)* and the *Resilience and Sustainability Facility (RSF)*. These initiatives helped maintain fiscal discipline and guided inflation expectations downward.
Inflation during the *July–May* period averaged *4.6%, thanks to a notable reduction in **food and energy prices. In response, the **State Bank of Pakistan* implemented aggressive monetary easing, slashing the *policy rate from 20.5% to 11%, a cumulative cut of **950 basis points* aimed at stimulating private sector lending and economic activity.
Revenues Grow, Deficit Narrows
On the fiscal front, *Federal Board of Revenue (FBR) collections* rose by *25.9%, while **non-tax income* surged by *68.1%. These gains supported a **primary budget surplus of 3.2% of GDP* during the July–April period, narrowing the overall fiscal deficit.
The ministry noted that foreign exchange reserves improved through a mix of *external inflows and administrative actions, although the **Pakistani rupee* still weakened by *Rs5.03* against the U.S. dollar year-on-year.
Manufacturing Lags Despite Broader Economic Gains
Despite positive indicators in the broader economy, *large-scale manufacturing (LSM)* declined by *1.52%* in FY25. The ministry acknowledged that while some sectors demonstrated resilience, *energy constraints, **structural inefficiencies, and **high input costs* continued to dampen output.
Outlook: Easing Inflation and Policy Support to Drive Recovery
Looking ahead, the Ministry of Finance expects continued disinflation and credit expansion to support economic growth in the coming months. While foreign direct investment remains cautious—down *14.4% year-on-year*—the government remains focused on reforms aimed at unlocking long-term growth potential.
