Pakistan growth target 3.6% next year, inflation to dip to 12%, ministry says

By Thomson Reuters May 31, 2024 | 12:51 PM

(Reuters) – Pakistan’s Planning Ministry said on Friday that the economic outlook for the next year was positive, with a growth target of 3.6%, while inflation was likely to moderate to 12%.

Pakistan will present its annual budget on June 10, three days later than expected, two government sources said on Friday, as markets wait for details of plans seen as crucial to securing a new International Monetary Fund (IMF) loan. Pakistan’s fiscal year starts on July 1.

“The growth prospects hinge upon political stability, exchange rate, macroeconomic stabilization under IMF’s programme and expected fall in global oil and commodity prices,” the ministry said in its annual plan review.

Earlier in May, in its half-yearly report, Pakistan’s central bank said the economy was grappling with structural bottlenecks exacerbated by political uncertainty, despite some improvement in macroeconomic indicators. It predicted real GDP growth of 2%-3% for fiscal 2024.

The Planning Ministry said the fiscal deficit would narrow on the back of fiscal consolidation measures, and that domestic average inflation was likely to moderate to 12% owing to falls in global inflation.

Pakistani inflation is set to come in between 13.5% and 14.5% in May and to ease further to 12.5% to 13.5% by June, the finance ministry said on Wednesday in a monthly update.

Pakistan has been beset by inflation above 20% since May 2022, registering a high of 38% in May 2023, as it navigated reforms as part of an International Monetary Fund bailout programme. However, inflation has slowed over the past few months.

The planning ministry added that the Annual Plan Coordination Committee had approved an estimated 1.22 trillion rupees ($4.39 billion) for public sector development spending during the next fiscal year, lower than the 2.8 trillion rupees ($10 billion) requested by the ministries, due to fiscal constraints.

($1 = 278.1000 Pakistani rupees)

(Reporting by Asif Shahzad in Islamabad; writing by Ariba Shahid in Karachi; Editing by Alison Williams and Kevin Liffey)