Islamabad : Dec 27 : A monthly economic outlook for September 2023 released here by the Finance Division on Wednesday said since the beginning of FY2024, Pakistan’s economy stepped up on the recovery path.
It added that in August FY2024, month-on-month exports increased by 14.2 percent while imports grew by 2.1 percent for the same period.
The upturn in the global economy coupled
with relaxed import restrictions, is mitigating disruptions in the supply of raw materials and supporting export-oriented industries.
According to the outlook FDI also increased by 16.1 percent during
Jul-Aug FY2024 on account of rise in
Chinese investments and exchange rate
stability.
In the agriculture sector, the arrival of cotton in September 2023 posted a remarkable growth of 79.9 percent to 3.93 million bales compared to 2.19 million bales during same period last year. This surge reflects a growing focus on enhancing cotton production which is encouraging for the export and overall economic outlook in FY2024.
The large manufacturing scale sector (LSM) is recovering from slump. Although LSM remained negative in July FY2024,
however, 09 out of 22 sectors picked up
positive growth including Food (10.0%),
Tobacco (54.0%), Wearing Apparel (30.8%), Pharmaceuticals (54.0%), Chemicals (5.9%), and others. The better input situation through lifting of import restriction paving the way of sectoral growth. However, several sectors are still under pressure as
tight financing facilities and inflationary pressures persistently hinder their production activities.
CPI inflation recorded at 27.4 percent on a year-on-year basis in August 2023 as compared to 27.3 percent in August 2022. On a month-on-month basis, it increased to 1.7 percent in August 2023 compared to an increase of 3.5 percent in the previous month.
The government’s stern
administrative measures to curtail the
hoarding of commodities and foreign
currency measures resulted in moderating
the inflation pressure. However, given the international oil price pressure and
adjustment in energy prices, uncertainty in inflation will remain.
On the fiscal side, the fiscal deficit in July, FY2024 remained 0.2 percent of GDPalmost the same level as last year whereas the primary balance surplus improved to Rs 311.2 billion from Rs 142.2 billion last year.
The improvement in fiscal accounts is
attributed to a significant upsurge in net federal revenues, which outpaced the
growth in total expenditures. Net federal revenues grew by 66 percent largely primarily driven by a notable increase in non-tax collections, particularly stemming from higher receipts related to the petroleum development levy. On the other
hand, new tax measures and increased
collection from import-related taxes
contributed to raise tax collection. Within expenditures, although markup payments grew by 52 percent, non-markup spending was reduced by 48 percent. This reduction in non-markup spending played a key role in improving the primary surplus during July FY2024.