Latest news with #PakistanEconomy
Arab News
11 hours ago
- Business
- Arab News
Pakistan expects 2.7% economic growth in FY25 amid weak farm and industrial outlook
KARACHI: Pakistan's economy is expected to grow 2.7 percent in the outgoing fiscal year, missing the government's 3.7 percent target due to what analysts called weaker-than-expected performance in the agriculture and industrial sectors, as Finance Minister Muhammad Aurangzeb unveiled the annual Economic Survey on Monday. The survey, released ahead of the national budget on June 10, serves as a pre-budget document assessing the economy's trajectory over the past year. It outlines key indicators and policy challenges facing the country, which remains under an International Monetary Fund (IMF) program and is navigating a fragile recovery after a prolonged financial crisis. 'This has been a gradual recovery,' Aurangzeb told a televised news briefing in Islamabad, adding that the country's economic performance must be viewed in the larger global context. The finance minister said after contracting by 0.2 percent in FY23, Pakistan's economy grew 2.5 percent last year and is expected to expand slightly to 2.7 percent in the outgoing year. 'We plan to stay the course to ensure that we remain on the sustainable growth trajectory,' he added. Aurangzeb reaffirmed the government's commitment to implementing IMF-backed structural reforms to transform the fundamentals of Pakistan's economy. 'The DNA of Pakistan's economy has to be fundamentally changed through tax and energy reforms that have started showing remarkable results,' he said. The minister maintained staying in the IMF program would help Pakistan bring permanence to its hard-earned macroeconomic stability and reduce its economic vulnerability. 'Implementing a 37-month, US$7 billion IMF Extended Fund Facility (IMFEFF) has bolstered policy credibility and provided essential financial support to promote inclusive and reform-driven growth,' the Economic Survey also proclaimed. Analysts said Pakistan targeted 3.7 percent economic growth for the outgoing fiscal year but was forced to revise it to 2.7 percent last month due to underperformance in the agriculture sector. 'The government did fall short of its 3.7 percent GDP growth target for FY25 and primarily it was due to a major setback in the agriculture sector,' said Sana Tawfik, head of research at Arif Habib Limited. 'The agriculture sector posted a growth of just 0.6 percent so the situation was especially concerning in major crops,' she added. According to the survey, the agriculture sector is expected to grow by 0.56 percent, while the industrial and services sectors are likely to expand by 4.77 percent and 2.91 percent, respectively. Meanwhile, inflation has eased significantly, giving room for monetary easing. Aurangzeb called the inflation trend a 'fantastic story' for Pakistan, with the pace of price hikes slowing to a record low of 0.3 percent in April. Inflation is expected to settle at 4.3 percent in the outgoing financial year. The State Bank of Pakistan also cut its benchmark interest rate by over 1,000 basis points to 11 percent in FY25, with more easing likely ahead. 'This is the domain of the State Bank and the monetary policy committee so I don't want to comment on that,' Aurangzeb said. 'But I do expect where our core inflation is, where headline inflation is, there is room to do more.' On the fiscal side, the survey showed that the government managed to contain the deficit at 2.6 percent of GDP for July-March, compared with 3.7 percent during the same period a year ago. Revenues rose sharply, with tax collections increasing by 26.3 percent to Rs9.3 trillion ($32.9 billion), while total revenues stood at Rs13.4 trillion ($47.5 billion). Primary surplus also improved to 3.0 percent from 1.5 percent. Government expenditure during this period rose to Rs16.3 trillion ($58 billion), with current and development spending increasing by 18.3 percent and 33 percent, respectively. On the external front, Pakistan recorded a sharp turnaround in its current account, moving from a $1.3 billion deficit to a $1.9 billion surplus, driven by improved exports and record remittance inflows. 'The industry also struggled. If you look at the manufacturing sub-sector so LSM [large scale manufacturing] remained in the negative territory,' said Tawfik, noting that weak domestic demand, high inflation and elevated interest rates had weighed on performance. 'In short both demand and supply side factors combined dragged down the overall growth across key sectors of the economy,' she continued. Aurangzeb said the government was working to further reduce energy costs for local investors. 'On the energy side, as I said one-third of the tariffs, seven rupee is not a small amount and Mr. Leghari [power minister] is working on it day in and day out,' he said. Planning Minister Ahsan Iqbal last week said the government was targeting 4.2 percent growth in the next fiscal year starting July. Aurangzeb echoed this target, noting that growth would be driven by a rebound in agriculture and industry. 'This target would be achieved through growth in industries and agriculture that are expected to rebound on the back of government's favorable financial, tax and energy policies,' he said. Pakistan's multilateral and bilateral partners, including the IMF, World Bank, China, Saudi Arabia and the United Arab Emirates, remain supportive of the country's reform path. 'With respect to the Fund and multilateral partners I've already mentioned we are in a good place with them both in terms of the mission and the senior management of the Fund,' Aurangzeb said. 'The monetary institutions and our bilateral partners are standing by us as we move forward.' Shankar Talreja, an economist and director at Topline Research Ltd., expressed optimism about the outlook. 'There will be some natural rebound in important crops under the agriculture segment,' he said. 'Similarly, due to lower interest rates, industrial and services sectors will also post decent growth.'
CNA
14 hours ago
- Business
- CNA
Pakistan's economy to grow 2.7% in fiscal 2025, survey shows
ISLAMABAD :Pakistan's economy likely grew 2.7 per cent in the fiscal year ending June 2025 after expanding 2.5 per cent in the previous year, the government's annual snapshot of economic performance showed on Monday, a day before the federal budget is unveiled. The government initially targeted 3.6 per cent growth in gross domestic product for this financial year, but lowered that to 2.7 per cent last month. The International Monetary Fund expects growth of 2.6 per cent this financial year and 3.6 per cent next. Prime Minister Shehbaz Sharif's government is aiming for 4.2 per cent growth next fiscal year amid competing priorities, including boosting investment, maintaining a primary surplus, and managing defence spending amid tensions with India. Finance Minister Muhammad Aurangzeb said he did not want the economy to expand too quickly, which has led in the past to a surge in imports. 'Don't get into a sugar rush,' Aurangzeb said. 'Because the moment we go into a consumption-led growth, and our imports go haywire and our balance of payments problem intensifies, that sort of derails the entire discussion,' he told a press conference. For fiscal 2025, growth was held back by a reduction in output from large-scale manufacturing and a decline in major crops. Agricultural sector growth of 0.6 per cent was the lowest in nine years, hit by adverse weather. Topline Securities, a local brokerage, said the 2.7 per cent growth in fiscal 2025 was well below Pakistan's long-term average of 4.7 per cent, and was likely to be revised down due to optimistic assumptions on industrial output. The government's total revenue for the first three quarters of fiscal 2025 was 13.37 trillion rupees, the survey showed, up 36.7 per cent over the previous year. Pakistan had a current account surplus of $1.9 billion in the nine months compared with a deficit of $200 million in the same period a year earlier, it showed. The central bank, in a bid to encourage growth, has cut its policy rate by more than 1,000 basis points this fiscal year. Its latest cut last month brought the key rate to 11 per cent, resuming an easing cycle that had brought rates down from 22 per cent after a pause in March. Aurangzeb said easier credit terms should bolster the economic recovery. The fiscal deficit was 2.6 per cent of GDP in the first three quarters of the fiscal year. Inflation was seen at 4.6 per cent for the year. The update comes as Pakistan's economy is stabilising but remains fragile as the country navigates reforms under a $7 billion IMF programme.
Arab News
16 hours ago
- Business
- Arab News
Pakistan economy to grow 2.7 percent in FY25, economic survey shows
ISLAMABAD: Pakistan's economy is likely to expand 2.7 percent in the fiscal year ending June 2025 after growing 2.5 percent during the previous year, the government's economic survey showed on Monday, a day before the country's federal budget is unveiled. The government initially targeted 3.6 percent GDP growth, but lowered it to 2.7 percent last month. The IMF expects real GDP to grow by 2.6 percent in FY25 and for the economy to grow 3.6 percent in FY26. Prime Minister Shehbaz Sharif's government aims for 4.2 percent GDP growth next year, the country's planning minister said last week, amid competing priorities, including stimulating investment, maintaining a primary surplus, and managing defense expenditure amid heightened tensions with India. Pakistan's central bank, in a bid to encourage growth, cut its policy rate by more than 1,000 basis points in the current fiscal year. Its latest cut last month brought the key rate to 11 percent, resuming an easing cycle that had brought rates down from 22 percent after a brief pause in March. Pakistan had a current account surplus of $1.9 billion in the July to April period of the current fiscal year compared to a deficit of $200 million in the same period last year, the survey showed. 'Pakistan's economy has been globally acknowledged for achieving macroeconomic stabilization in the outgoing fiscal year,' Finance Minister Muhammad Aurangzeb said in his foreword to the survey. 'Pakistan is consistently advancing on an upward trajectory, built upon investment friendly reforms, enhanced domestic savings, and increased foreign direct investment, with GDP growth projected at 5.7 percent over the medium term,' he said. The economic survey, a key pre-budget document, comes at a time when Pakistan's economy is stabilizing but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund program. Pakistan's federal budget for the next fiscal year starting July will be released on Tuesday. The government's total revenue for the first three quarters of the current year stood at 13.37 trillion rupees, the survey showed. Increasing revenue to trim the fiscal deficit, a key demand of the IMF program, is considered challenging for Islamabad. Other key performance indicators mentioned in the economic survey include fiscal deficit at 2.6 percent of GDP during the first three quarters of the fiscal year. Inflation was seen at 4.6 percent for the year.
Reuters
17 hours ago
- Business
- Reuters
Pakistan economy to grow 2.7% in FY25, economic survey shows
ISLAMABAD, June 9 (Reuters) - Pakistan's economy is likely to expand 2.7% in the fiscal year ending June 2025 after growing 2.5% during the previous year, the government's economic survey showed on Monday, a day before the country's federal budget is unveiled. The government initially targeted 3.6% GDP growth, but lowered it to 2.7% last month. The IMF expects real GDP to grow by 2.6% in FY25 and for the economy to grow 3.6% in FY26. Prime Minister Shehbaz Sharif's government aims for 4.2% GDP growth next year, the country's planning minister said last week, amid competing priorities, including stimulating investment, maintaining a primary surplus, and managing defence expenditure amid heightened tensions with India. Pakistan's central bank, in a bid to encourage growth, cut its policy rate by more than 1,000 basis points in the current fiscal year. Its latest cut last month brought the key rate to 11%, resuming an easing cycle that had brought rates down from 22% after a brief pause in March. Pakistan had a current account surplus of $1.9 billion in the July to April period of the current fiscal year compared to a deficit of $200 million in the same period last year, the survey showed. 'Pakistan's economy has been globally acknowledged for achieving macroeconomic stabilisation in the outgoing fiscal year,' Finance Minister Muhammad Aurangzeb said in his foreword to the survey. 'Pakistan is consistently advancing on an upward trajectory, built upon investment friendly reforms, enhanced domestic savings, and increased foreign direct investment, with GDP growth projected at 5.7 percent over the medium term,' he said. The economic survey, a key pre-budget document, comes at a time when Pakistan's economy is stabilising but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund programme. Pakistan's federal budget for the next fiscal year starting July will be released on Tuesday. The government's total revenue for the first three quarters of the current year stood at 13.37 trillion rupees, the survey showed. Increasing revenue to trim the fiscal deficit, a key demand of the IMF programme, is considered challenging for Islamabad. Other key performance indicators mentioned in the economic survey include fiscal deficit at 2.6% of GDP during the first three quarters of the fiscal year. Inflation was seen at 4.6% for the year.
CNA
17 hours ago
- Business
- CNA
Pakistan economy to grow 2.7% in FY25, economic survey shows
ISLAMABAD :Pakistan's economy is likely to expand 2.7 per cent in the fiscal year ending June 2025 after growing 2.5 per cent during the previous year, the government's economic survey showed on Monday, a day before the country's federal budget is unveiled. The government initially targeted 3.6 per cent GDP growth, but lowered it to 2.7 per cent last month. The IMF expects real GDP to grow by 2.6 per cent in FY25 and for the economy to grow 3.6 per cent in FY26. Prime Minister Shehbaz Sharif's government aims for 4.2 per cent GDP growth next year, the country's planning minister said last week, amid competing priorities, including stimulating investment, maintaining a primary surplus, and managing defence expenditure amid heightened tensions with India. Pakistan's central bank, in a bid to encourage growth, cut its policy rate by more than 1,000 basis points in the current fiscal year. Its latest cut last month brought the key rate to 11 per cent, resuming an easing cycle that had brought rates down from 22 per cent after a brief pause in March. Pakistan had a current account surplus of $1.9 billion in the July to April period of the current fiscal year compared to a deficit of $200 million in the same period last year, the survey showed. 'Pakistan's economy has been globally acknowledged for achieving macroeconomic stabilisation in the outgoing fiscal year,' Finance Minister Muhammad Aurangzeb said in his foreword to the survey. 'Pakistan is consistently advancing on an upward trajectory, built upon investment friendly reforms, enhanced domestic savings, and increased foreign direct investment, with GDP growth projected at 5.7 per cent over the medium term,' he said. The economic survey, a key pre-budget document, comes at a time when Pakistan's economy is stabilising but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund programme. Pakistan's federal budget for the next fiscal year starting July will be released on Tuesday. The government's total revenue for the first three quarters of the current year stood at 13.37 trillion rupees, the survey showed. Increasing revenue to trim the fiscal deficit, a key demand of the IMF programme, is considered challenging for Islamabad. Other key performance indicators mentioned in the economic survey include fiscal deficit at 2.6 per cent of GDP during the first three quarters of the fiscal year.
