Pakistan’s economic outlook for the coming months presents a cautiously optimistic picture, with signs of resilience emerging from key sectors such as agriculture, large-scale manufacturing (LSM), and external trade. The real sector of the economy continues to benefit from government policies aimed at supporting agriculture and industry, fostering conditions conducive to gradual recovery.
Agriculture Sector Performance
The agriculture sector remains a key pillar of the economy, with wheat sowing actively underway to meet production targets for the upcoming season. Government policies are focused on ensuring timely and affordable access to critical inputs for farmers, including seeds, fertilizers, and machinery. These efforts are vital to meeting the targets for both cultivated area and output, which is expected to drive agricultural growth. The government’s continued support for the sector is key to maintaining food security and stabilizing prices in the coming months.
Recovery in Large-Scale Manufacturing (LSM)
On the industrial front, the LSM sector is showing early signs of recovery, despite some challenges. Year-on-year growth remains in the negative, but the month-on-month performance demonstrates a gradual upward trajectory. Key sectors such as textiles and automobiles are exhibiting resilience with production numbers beginning to rise. Continued policy support, coupled with external economic stability, provides a foundation for a sustained recovery in the LSM sector.
While the LSM sector still faces headwinds, including global economic uncertainties, the outlook for the next few months is more optimistic, with steady growth expected in critical industries. This is supported by both domestic policy measures and the anticipated stabilization of global markets.
Inflation and Fiscal Consolidation
Inflation is expected to remain within a manageable range of 5.8% – 6.8% in November 2024, before further receding to 5.6% – 6.5% in December 2024. The government’s fiscal consolidation efforts, combined with a reduction in food inflation and stabilization of energy prices, have contributed to this favorable inflation outlook.
This controlled inflationary environment will support consumer purchasing power and contribute to more stable economic activities. Coupled with ongoing fiscal discipline, the economy is expected to maintain a steady growth trajectory in the latter part of FY2025.
External Sector Sustainability
The external sector has also shown significant improvement, particularly with the current account turning into a surplus during the July-October FY2025 period. This positive development is driven by a rise in exports, stable imports, and strong remittance inflows. The surplus in the current account is a strong indicator of external sector sustainability, providing further support to the overall economic recovery.
Looking ahead, Pakistan’s exports are projected to remain within the range of $2.5 billion to $3.0 billion in November 2024, while imports are expected to stay between $4.5 billion and $4.9 billion. Worker’s remittances are forecasted to remain robust, with inflows between $2.8 billion and $3.3 billion in the same period.
Conclusion
Overall, Pakistan’s economy is on a path to progressive recovery, bolstered by continued policy support in agriculture, a rebound in key manufacturing sectors, and a stable inflationary environment. While challenges remain, especially in global markets, the outlook for FY2025 remains positive, with key indicators pointing towards sustainable growth in both the domestic and external sectors. With fiscal consolidation efforts and controlled inflation, the foundation for continued recovery is strong.