Decrease in inflation and increase in rupee value during July and August, Ministry of Finance reports

During the first two months of the fiscal year 2024-25 (July and August), there has been a decrease in inflation and an increase in the value of the rupee.

Inflation has dropped from 23.4% to 9.6%, while there has been a recorded increase in remittances, exports, imports, and foreign investment.

The Ministry of Finance has released a report regarding economic performance in July and August, stating that positive progress has been observed in Pakistan’s economy during the first two months of the fiscal year 2024-25.

The report indicates a decrease in inflation, an increase in industrial production and exports, a reduction in the current account deficit, and a strengthening of the financial sector.

According to the report, exports have increased by 7.2% and imports by 13.8%. The current account deficit has decreased by 80.9% during the first two months of this fiscal year.

The report from the Ministry of Finance mentions that inflation has decreased to 9.6% from 23.4%, with projections indicating that the rate will remain between 8% and 9% in September and October.

On the other hand, the fiscal deficit has increased from 225 billion PKR to 387 billion PKR during July and August.

Furthermore, the report notes a 105.6% increase in imports of agricultural machinery, amounting to 17.6 million USD, and expects improvements in production in the coming months due to farm mechanization and modern agricultural methods.

In the Kharif season of 2024, urea fertilizer sales decreased by 13.6%, totaling 2,381 thousand tons, while DAP fertilizer sales dropped by 21.9% compared to Kharif 2023.

Additionally, due to climate change and low wheat prices, the sowing of Kharif crops may be delayed.

According to the report, the production of Large Scale Manufacturing (LSM) increased by 2.4% in July 2024, after a decrease of 5.4% in July 2023. Positive growth was observed in 14 out of 22 sectors, including textiles, food, beverages, chemicals, and vehicles.

The textile sector showed positive growth, accounting for 18.2% of LSM after 24 months.

In the first two months of this fiscal year, vehicle production increased by 19.5% and sales by 16.3%. Car production rose by 15%, while truck and bus production surged by 120.4%.

However, tractor production decreased by 26.9%. During the first two months (July and August) of this fiscal year, cement deliveries amounted to 6.4 million tons.