Karachi May 15 2024: State Bank of Pakistan projects the average NCPI inflation in the range of 23.0 – 25.0 percent for FY24, lower than 29.2 percent in FY23, and is expected to come down to 5 – 7 percent range by September 2025.
SBP published its half yearly report on the State of Pakistan’s economy yesterday. The Report contains the analysis prepared on data outturns for the July-December FY24. According to the Report, the real economic activities moderately recovered against the contraction last year, while Stand-By Arrangement (SBA) with the IMF helped reduce stress on external account.
On external account, the CAD is projected to remain lower than earlier estimates, amid slightly improved global outlook and domestic growth prospects to boost foreign exchange earnings from exports and remittances. The SBP projects the current account deficit in the range of 0.5 – 1.5 percent of GDP for FY24.
This macroeconomic outlook remains susceptible to escalating geopolitical tensions, unfavorable weather conditions, adverse movements in global oil prices, and subsequent external account pressures. Further adjustments in energy prices and fiscal consolidation -warranted for slowing the pace of debt accumulation – may also weigh on economic activities and inflation.
The central bank expects continuation of modest economic recovery in the second half of FY24. In the backdrop of improvements in business confidence, high frequency demand indicators since November 2023, and prospects for a good wheat production during FY24, the SBP projects real GDP growth in the range of 2 – 3 percent for FY24. The NCPI inflation, on the other hand, is expected to remain downward trajectory despite uncertainties persisting in both domestic economy and international commodity market.
