Government Expects Export Growth and 5-7% Inflation in FY26

The government projects a positive export outlook and a 5-7% inflation rate for 2025-26 due to improved global economic conditions and domestic recovery trends. The Ministry of Finance's report for June highlights the potential increase in demand for Pakistani exports based on Composite Leading Indicators of major trading partners operating above their long-term average.

June's inflation is expected to be between 3-4%. The report also anticipates a favorable outlook for Large-Scale Manufacturing in the upcoming months, driven by strong trends in cement despatches and automobile sales. The uptick in private sector credit indicates growing production activity and enhanced investor confidence.

Rising remittances and exports are likely to maintain a surplus in the current account for FY25. From July to May FY25, the current account showed a surplus of $1.8bn compared to a deficit of $1.6bn in the same period last year.

Goods exports increased by 4% to $29.7bn, while imports rose by 11.5% to $54.1bn, resulting in a widened trade deficit. Key export gains were observed in knitwear, garments, and bedwear, while major import increases were in palm oil and electrical machinery.

Service exports grew by 8.5% to $7.6bn, with IT exports surging by 18.7% to $3.5bn. Worker remittances saw a significant rise of 28.8% to $34.9bn, led by higher inflows from Saudi Arabia and the UAE.

Net foreign direct investment stood at $2bn, with China being the top investor. Foreign portfolio investment recorded net outflows, and the country's foreign exchange reserves stood at $17bn as of June 13.

On the fiscal side, revenue growth exceeded expenditure growth during July-April FY25, leading to a decline in the fiscal deficit and an improvement in the primary surplus.

According to the source: Dawn.