Pakistan

Pakistan’s inflation drops to lowest point in 3.5 years

Ministry of Finance's Economic Outlook report shows increases in remittances, exports, imports, and foreign investment

News Desk October 30, 2024

Experts have highlighted two major reasons for Pakistan’s record-high inflation reading of 36.4% in April: the sharp devaluation of the Pakistani rupee against the US dollar and the global rise in commodity prices. Photo: file

Pakistan's inflation rate has reached its lowest level in three and a half years, with September's rate recorded at 6.9%, the lowest in 44 months.

According to the monthly Economic Outlook report released by the Ministry of Finance, there has been a notable increase in remittances, exports, imports, and foreign investment.

The report also highlights a significant 92.1% reduction in the current account deficit. From July to September, Federal Board of Revenue (FBR) tax collection rose by 25.5%, while non-tax revenue increased by 20.8% over the same three-month period.

The report states that the inflation rate has dropped from 29% to 9.2%, although the production in major industries has decreased by 0.19% over the past two months.

The Ministry of Finance noted that the economy demonstrated stable recovery in the first quarter, bolstered by the disbursement of $1.03 billion from the International Monetary Fund (IMF).

The recent Shanghai Cooperation Organization (SCO) conference also contributed to improved business and market confidence.

Looking ahead, the report suggests that the economy is on a path to sustainable recovery. Remittances have increased by 38.8%, reaching $8.78 billion, while Pakistani exports rose by 7.8% to $7.49 billion.

During the review period, total foreign investment surged by 70.4%, exceeding $900 million, with foreign direct investment rising by 48% to $770 million.

Additionally, the State Bank's foreign exchange reserves increased from $7.61 billion to over $11 billion. The stock market saw an impressive gain of 78.4%, surpassing 90,000 points, and the exchange rate of the dollar decreased from 280.29 to 277.62 Pakistani rupees over the past year.

From July to September, tax revenue grew by 25.5%, totalling PKR 2,563 billion, while non-tax revenue reached PKR 341 billion, a 20.8% increase.

The report indicated that in the initial two months of the period, the fiscal deficit rose by 4.3%, exceeding PKR 841 billion. The current account deficit fell dramatically by 92%, reaching $9.8 million.