The Finance Ministry has projected that the inflation outlook for June 2024 will be higher compared to the previous month, primarily due to the price increases of perishable items driven by Eid-ul-Azha festivities. This forecast was disclosed by the Economic Adviser Wing (EAW) of the Finance Ministry in its monthly Economic Update and Outlook for June 2024, released on Friday. The update highlights the necessity of fiscal discipline, effective implementation of a home-grown growth program, and bilateral and multilateral cooperation to achieve a sustainable growth path in the coming years.
The report revealed that the fiscal deficit for the period from July to April 2024 stood at 4.5 percent of the GDP. During the same period, federal public sector spending amounted to Rs359 billion, marking an 11.2 percent decline from Rs404 billion in the previous fiscal year. Despite this reduction in spending, the primary balance showed a surplus of 1.5 percent of GDP, significantly surpassing the annual target of 0.4 percent of GDP.
Analyzing economic indicators from July to May 2023-2024 compared to the same period last year, the report noted a positive trend in remittances, which increased by 7.7 percent to $27.1 billion from $24.1 billion. Exports also saw an upward trend, rising by 11.3 percent to $28.7 billion from $25.8 billion. On the other hand, imports contracted by 2.3 percent, decreasing to $48.4 billion from $49.5 billion in the same period the previous year.
The gross domestic product (GDP) growth for the fiscal year 2024 was recorded at 2.4 percent, demonstrating broad-based growth across various sectors. The agriculture sector expanded by 6.3 percent, while both the industry and services sectors grew by 1.2 percent each. The robust growth in agriculture is attributed to government initiatives, improved input supply, and increased credit disbursement to farmers. Key crops such as cotton, rice, and wheat exhibited healthy growth, although sugarcane and maize experienced slight declines.
The production and sales of farm tractors also saw significant growth during the period from July to May 2024, with production increasing by 44.5 percent and sales by 48 percent. Additionally, agricultural credit disbursement rose by 34.5 percent, further supporting the sector’s growth.
The Large Scale Manufacturing (LSM) sector experienced moderate growth of 0.45 percent during July to April 2024, following consecutive negative growth in the first two quarters. The economic update noted that nearly 50 percent of LSM sub-sectors have recovered and posted positive growth, indicating a rebound in the third quarter.
On the external front, the current account balance showed sustained improvement. The current account posted a deficit of $0.5 billion for the period from July to May of the fiscal year 2024, compared to a deficit of $3.9 billion in the same period last year. This improvement is largely attributed to better trade balances and increased remittances.
The Finance Ministry’s Economic Update and Outlook for June 2024 also emphasized the importance of fiscal discipline and the effective implementation of the home-grown growth program. These measures, along with bilateral and multilateral cooperation, are deemed essential for placing the economy on a sustainable growth path in the coming years.
The update provides a comprehensive overview of the economic performance and fiscal health of the country. It underscores the government’s efforts to manage public spending, enhance revenue collection, and support key sectors such as agriculture and manufacturing. The positive trends in remittances, exports, and the current account balance reflect a resilient economy capable of navigating challenges and achieving steady growth.
