Pakistan’s headline inflation is expected to remain within the 4-5% range for December, thanks to exchange rate stability and contained food prices.
In its Monthly Economic Update and Outlook, the Ministry of Finance stressed the government anticipated economic stability to persist on the back of remittances and exports inflows. It said improved fiscal performance during July-October, driven by higher revenues and prudent expenditure management, was expected to create fiscal space for development spending and support sustainable economic growth, going forward.
Agriculture
The report maintained the government is cognizant of achieving crop production targets by facilitating farmers in achieving the desired production levels. However, it noted, weather conditions may pose challenges. Average rainfall at less than normal levels, it warned, may lead to water stress during the critical emerging stage of Rabi crops like wheat and barley, especially in rain-fed agricultural zones.
According to the report, the government has set a wheat production target of 27.92 million tons from an area of 9.262 million hectares for Rabi 2024-25. To achieve this target, concerted efforts are underway to ensure the timely availability of essential farm inputs, including agricultural credit, quality seeds, fertilizers, and mechanization support.
The Finance Ministry said agriculture credit disbursement had reached Rs. 925.7 billion during the first five months of FY2024-25, a 8.5% increase compared to the Rs. 853 billion disbursed during the same period last year. It anticipated this positive trend to persist, aligning with the ambitious agriculture credit target of Rs. 2,572.3 billion for FY2025.
The report noted that agricultural machinery imports had also significantly risen by 42.3%, amounting to $45.3 million. This highlights a growing emphasis on mechanization and efficiency improvements. For the Rabi 2024-25 season, urea offtake totaled 1,012,000 tons, a 5.4% decline compared to the year prior. Meanwhile, DAP offtake increased substantially by 27.4%, reaching 559,000 tons. Increase in DAP offtake may be attributed to the Punjab government’s initiative of providing interest-free loans to small farmers through the Kissan Card Program for the purchase of agricultural inputs.
Industry
On the industrial front, the Finance Ministry said the robust performance of high weighted sectors, which continued to drive large-scale manufacturing in October, underscored the economy’s resilience. Further, it said, automobile and cement sectors exhibited strong performance in November, providing a critical boost to their allied industries.
The potential ripple effect and the interconnectedness of industrial sectors may reinforce a broader growth trajectory. Moreover, the further easing of monetary policy in December was expected to stimulate economic activity. The rising demand for credit, especially from private sector, is a positive signal of growing confidence in the economy, read the report. This momentum is poised to accelerate, fostering higher production levels and enhanced economic output in the coming months.