KARACHI: The State Bank of Pakistan released its annual report on the state of Pakistan’s economy for the year 2023-24 on Thursday. The development was bolstered by reduced uncertainty and favorable global economic conditions.
According to the report, the increase in the country’s agricultural production also contributed to achieving slightly better economic results during the year. During FY24, there was a moderate recovery in real GDP due to agriculture, wheat and rice in FY24. Record production and recovery in cotton production contributed significantly to increase agricultural production.
The report highlighted that despite a recovery in real economic activity, the current account deficit narrowed further to a 13-month low as strong growth in remittances and exports offset the impact of a modest increase in imports. According to the report, the State Bank adopted a tight monetary policy and maintained the policy rate at 22% for almost the entire fiscal year 2024. Inflation decreased from the highest level of 38% in May 2023 to 12.6% in June 2024. .
Average inflation in FY24 stood at 23.4%, significantly lower than the 29.2% level in FY23. Revolving credit levels have increased as a result of long-standing deficiencies in the power sector’s performance, although the government has significantly revised prices. has begun to address the challenges of the energy sector through the sectoral policy and regulatory reforms, but there is a need to broaden the scope of these efforts by introducing sectoral policy and regulatory reforms.
The improvement in Pakistan’s overall economic conditions is expected to continue in FY25, and the approval of the Extended Fund Facility (EFF) program with the IMF in September 2024 is expected to further stabilize the country’s external account position. As the country’s credit rating improves and investor confidence increases, average inflation in FY25 may come down from the initial estimate range of 11.5-13.5%, along with ongoing fiscal consolidation. It will help to reduce inflation further.
