The State Bank of Pakistan (SBP), presented a cautiously optimistic outlook on the country’s economic state in its half-year report for fiscal year 2024 (H1-FY24). The report indicated a moderate recovery in economic activity compared to the previous year’s contraction. The Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) played a crucial role in alleviating pressure on Pakistan’s external finances.
The report attributes the improved economic conditions to tighter monetary and fiscal policies, enhanced agricultural output, and lower global commodity prices, which collectively contributed to a reduced current account deficit. However, it also highlighted persistent challenges. Inflation remains high despite subdued domestic demand, and structural issues such as limited savings, low investment, and a narrow tax base continue to pose significant hurdles. Additionally, political uncertainty hampers investment and economic development.
The SBP forecasts modest economic growth in the second half of FY24, projecting a range of 2-3%. Inflation is expected to decline, averaging lower than last year’s levels. The current account deficit is also projected to be lower than earlier estimates. However, the report cautions against potential disruptions from geopolitical tensions, adverse weather conditions, and global oil price fluctuations. Furthermore, adjustments to energy prices and fiscal consolidation efforts might impact economic activity and inflation.
The report emphasizes the necessity for long-term policy reforms to address these structural bottlenecks and achieve sustainable economic development. For more detailed insights, the full report is available at the following link: