Pakistan’s planning ministry forecasts growth at 3.6% for next year

ISLAMABAD: Pakistan’s Planning Ministry said on Friday that the economic outlook for the next year was positive, with a growth target of 3.6 percent, while inflation was likely to moderate to 12 percent.

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 program 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 percent-3 percent 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 percent owing to falls in global inflation.

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

Pakistan has been beset by inflation above 20 percent since May 2022, registering a high of 38 percent in May 2023, as it navigated reforms as part of an International Monetary Fund bailout program. 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.