Islamabad (Newsman): Economic Update released here by Finance ministry on Wednesday suggests Pakistan remained on track of recovery due to robust output of its major sectors including agriculture and large scale manufacturing (LSM) . The update added that Pakistan’s economy has demonstrated sustained recovery during first quarter of FY2025.
It noted stability in both the fiscal and external sectors has been maintained, supported by significant financial inflows. Pakistan has received first tranche of US$ 1.03 billion under IMF EFF programme, reinforcing macroeconomic stability.
Moreover, successful hosting of SCO summit 2024 in Pakistan are paving the way for business and market confidence.
In the wake of positive developments, the economy will continue to observe sustainable economic recovery in the coming months.
The agricultural sector is benefiting from mechanization-based productivity. During FY2025 (Jul-Sep), imports of agricultural machinery increased by 115.9 percent to $29.7 million. Urea offtake during Kharif 2024 recorded at 2,746 thousand tonnes while DAPofftake stood at 642 thousand tonnes.
Overall fertilizer production during Jul-Sep FY2025 increased by 3.7 percent to 2.45 mn tons compared to last year. During Kharif-2024, water availability remained satisfactory .
During Jul-Aug FY2025, the production of wheat threshers increased by 22.8 percent compared to last year. All these factors will positively impact the growth of agriculture sector.
LSM shows resilience, with monthly growth signaling recovery despite seasonal challengesLarge-Scale Manufacturing (LSM) on MoM basis observed a substantial growth of 4.7 percent in August 2024, reflecting the revival of economic activities.
However, it has observed a slight dip of 0.2 percent during Jul-Aug FY2025, compared to 2.5 percent contraction in last year.
During the period, 13 out of 22 sectors witnessed positive growth which includes, Textile, Food, Beverages, Wearing Apparel, Coke & Petroleum Products, Chemicals, Automobiles and Paper & Board.
During Jul-Sep FY2025, the production and sales of all vehicles witnessed the growth of 18.1 percent and 17.0 percent, respectively.
Major growth drivers included, production of Cars increased by 29.9 percent, Trucks & Buses by 95.5 percent and Jeeps & Pick-ups by 34.1 percent.
During Jul-Sep FY2025, total cement dispatches were 10.3 million tonnes, of which domestic dispatches stood at 8.1 million tonnes. Cement exports increased by 22.2 percent to 2.1 million tonnes.
In September 2024, cement dispatches were recorded at 3.5 million tonnes compared to 3.7 million tons last year.
Whereby, local cement dispatches stood at 2.6 million tonnes and export dispatches rose by 71.5 percent, with volumes increasing to 978,871 tonnes.
In October 2024, Pakistan hosted the Shanghai Cooperation Organization (SCO) Summit, marking a pivotal moment for regional economic integration.
The summit brought together leaders from SCO member countries, including China, Russia, India, and Central Asian states, with a focus on strengthening regional trade, connectivity, and security cooperation.
Pakistan emphasized expanding the China-Pakistan Economic Corridor (CPEC), deepening
energy partnerships, and enhancing counter-terrorism efforts through the Regional Anti-Terrorism Structure (RATS).
Key agreements were reached on advancing gas pipeline projects with Russia and promoting the use of local currencies for trade. These initiatives are expected to boost Pakistan’s tradecapacity, attract foreign direct investment, and enhance energy security.
The summit also focused on addressing climate change and ensuring food security aligned with the goal of sustainable growth, further improving the country’s economic prospects by fostering long-term resilience and regional stability.
CPI inflation has been on a consistent decline, reaching 44 months low in September. During Jul-September FY2025, CPI Inflation stood at 9.2% while it was 29.0% in the same period last year.
YoY CPI Inflation in September 2024 was recorded at 6.9% – lowest level in 44 months, compared to 9.6% percent in the previous month and 31.4 percent in September 2023.
On MoM basis, inflation decreased by 0.5% in September 2024 compared to an increase of 2.0 percent in the same month last year.
The significant contributors of inflation are Perishable food items 20.4%, Housing, water, gas and fuel 20.9%, Health 13.7%, Clothing and foot wear 15.5% and Education 12.6%.
The sensitive price index (SPI) witnessed a decline of 0.22% in the week ended on 24 October 2024. Within SPI, prices of 13 items increased, 10 decreased and 28 remained stable.
The fiscal sector continued to observe resilience, remaining on the path of consolidation.
During Jul-Aug FY2025, the net federal revenues grew by 20.8 percent to Rs 986.7 billion from Rs 816.6 billion same period last year.
Both tax and non-tax revenues increased by 20.8 percent and 20.6 percent, respectively.
The main contributor to non-tax revenues was the petroleum levy which surged by 19.6 percent to Rs 168.3 billion from Rs.140.7 billion last year.
Whereas total expenditures grew by 3.1 percent to Rs 1,635.5 billion during Jul-Aug FY2025 against Rs 1,585.7 billion last year. The mark-up expenditure declined by 6.3 percent owing to the gradual decline in the policy rate.
Consequently, the fiscal deficit reduced to 0.7 percent of GDP as against 0.8 percent of GDP last year.
Additionally, the primary balance recorded a surplus of 0.05 percent of GDP,
During Jul-Sep FY2025, the FBR net tax collection grew by 25.5 percent to Rs 2,562.9 billion as compared to Rs 2,041.5 billion same period last year. In September 2024, FBR collected 32.7 percent more taxes to reach Rs 1,107 billion from Rs 834 billion in September 2023.
The external account stability remained intact. The external account position improved due to notable increase in exports and remittances .
Notwithstanding increase in imports. During JulSep FY2025, the current account deficit shrank to $ 0.1 billion compared to $ 1.2 billion last year.
However, current account recorded surplus for the second consecutive month in September 2024. During Jul-Sep FY2025, goods exports increased by 7.8 percent, reaching $ 7.5 billion, while imports recorded at $ 14.2 billion, compared to $ 12.3 billion in last year (15.7% increase).
This has led to trade deficit of $ 6.7 billion, up from $ 5.3 billion last year.
As per Pakistan Bureau of Statistics, the export commodities that registered notable positive growth include Rice (77.6%), Fruits and vegetables (17.4%), Knitwear (14.1%), Bedwear (13.3%), Readymade Garments (23.2%), and Chemicals & Pharma products (9.7%).
The major imports which registered rise include Petroleum crude (51%), Liquified Natural Gas (14.3%), Raw cotton (21.2%), Fertilizers (367%), Machinery (21.7%), and Iron & steel scrap (4.0%).
The service exports grew to $1.9 billion (5.9%, up) whereas imports declined to $ 2.6 billion (3.3% down), resulting in a service trade deficit of $ 0.7 billion compared to $ 0.9 billion last year. IT exports grew by 33.5% to $0.9 billion against $ 0.7 billion last year. Foreign Direct Investment (FDI) stood at $ 771 million, 48.2 percent up from the previous year.
The main contributors were China ($404 million), Hong Kong ($99 million), and the UK ($72.2 million). The power sector received net FDI of $416 million, accounting for a 54% share, followed by Oil & Gas exploration with $ 97 million (12.6% share).
Moreover, Private Foreign Portfolio Investment (FPI) had a net outflow of $ 22.8 million, while Public FPI
recorded a net inflow of $155.3 million.
Workers’ remittances recoded highest ever quarterly inflows of $8.8 billion, marking 39% increase with the largest share from Saudi Arabia (24.5%).
Pakistan’s total liquid foreign exchange reserves were recorded at $16.0 billion on October 18, 2024, with the State Bank of Pakistan’s reserves at $11.0 billion.
Monetary factors remain favorable for inflation and Pakistan Stock Market continues to trend upward
st th During 1 July – 30 September, FY2025 money supply (M2) shows negative growth of 0.8 percent (Rs. -290.0 billion) compared to growth of 0.01 percent (Rs. 1.9 billion) last year.
Within M2, both NFA and NDA contributed for deceleration in M2 growth.
Private Sector Credit observed net retirement of Rs 127.6 billion against net retirement of Rs 194.5 billion during same period last year.