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CPI Down, Industrial Output Up as Key Signs of Recovery

Islamabad (TDI): According to the Monthly Economic Update & Outlook for September 2024 published by the Finance Division Economic Adviser’s Wing, Pakistan’s economy is exhibiting positive trends in the first two months of the fiscal year 2025.

The research suggests, there is a good prospect for exports as seen by the improvement of key economic indicators, such as the decline in inflation to single digits, the rise in industrial output, and the expansion of important exporting industries.

Because to the government’s conservative efforts for Pakistan’s economy, the current account deficit has decreased and the fiscal sector is still strong.

Pakistan’s economy headed toward stability in the fiscal year 2025, according to the Finance Division Economic Adviser’s Wing, which has posted “Monthly Economic Update & Outlook for September 2024.

The report claims that an optimistic view for exports is reflected in the single-digit inflation rate, the rise in industrial output, and the expansion of major exporting sectors.

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According to the report, conservative actions were primarily responsible for the fiscal sector’s resilience, while the current account deficit shrank. It states that this trend should continue in the upcoming months.

The agricultural sector is embracing innovation and advanced farming techniques, according to the economic forecast; an increase in output is projected.

Comparing the same period last year to the fiscal year 2025 (July-August), imports of agricultural machinery and implements rose by 105.6 percent to $17.6 million.

The report claims, DAP offtake fell by 21.9% compared to Kharif 2023 while urea offtake during Kharif 2024 (Apr-Aug) was recorded at 2,381 thousand tons, 13.6 % less than Kharif 2023.

It states that reduced cotton acreage, lower wheat prices, and delayed sowing of Kharif crops due to climate change could all be contributing factors to the decline.

The statement indicates that following a protracted decline, the expansion of the Large-Scale Manufacturing (LSM) industry has resumed.

As a result of better market circumstances and government support, LSM output grew by 2.4% in July 2024 after contracting by 5.4% in the same month last year.

Out of 22 industries, 14 saw positive growth at that time.

These sectors include Paper & Board, Textile, Food & Beverages, Wearing Apparel, Chemicals, Transportation, and Coke & Petroleum Products. After a 24-month period, textile, which had the highest weight in LSM (18.2), became positive.

Apart from that, during Jul-Aug of FY2025, production and sales of all vehicles climbed by 19.5% and 16.3%, respectively.

The production of cars increased by 15.0%, and that of trucks and buses by 120.4%, while the production of tractors decreased by 26.9%.

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CPI inflation fell to one digit, and more declines are expected soon. In August 2024, year-over-year CPI inflation dropped to 9.6% from 27.4% in the same month the previous year, the lowest level in 34 months.

Compared to increases of 2.1% in the previous month and 1.7% in August 2023, it increased by 0.4% on a month-over-month basis in August 2024.

From Rs 380.9 billion in July of the previous year to Rs 408.4 billion in July of FY2025, net federal revenues increased by 7.2%.

The increase in taxes collected by 22.6 percent and the increase in non-tax collection by 20.5% have resulted in a boost in revenues.

As a result, compared to 0.2% of GDP in the same month previous year, the fiscal deficit was recorded at 0.3% of GDP.

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Compared to 0.3% of GDP the previous year, primary balance was able to report a surplus of 0.1% of GDP.

Comparing the July-August fiscal year 2025 to the same time in the previous year, the FBR net tax collection increased by 20.6% to Rs 1,456 billion.

FBR increased their tax revenue by 19.0% in August 2024, from Rs 669 billion to Rs 796 billion.

Sania Zahra
Sania Zahrahttps://thediplomaticinsight.com
A seasoned web content writer with a passion for crafting compelling narratives around the latest trends and news. Adept at producing engaging blog posts and captivating product descriptions. Driven by an insatiable curiosity and a flair for storytelling, eagerly seeking new opportunities to expand my writing horizons and contribute meaningfully to the ever-evolving literary landscape.

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