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High inflation, economic slowdown: 'Pakistan still facing considerable challenges'

  • In its ‘Monthly Economic Update & Outlook', finance ministry says headline inflation expected to remain at elevated level
Published April 29, 2023

The Ministry of Finance (MoF) has said that Pakistan's economy is still facing significant challenges owing to high inflation and an economic slowdown. However, the recent surplus in the balance of payment (Bop) would provide a breather.

In its ‘Monthly Economic Update & Outlook', the ministry said that headline inflation (CPI) is expected to remain at an elevated level in the months to come.

“Its key drivers are food and energy price hikes. Further, currency depreciation and rising administered prices have contributed to jack up overall price level,” read the report.

The Ministry of Finance admitted that despite the contractionary monetary policy of the State Bank of Pakistan (SBP), inflationary expectations are not settling down.

“Inflation is expected to remain in the range of 36-38% for April, 2023,” it said.

Ministry of Finance warns inflation to remain high, could increase further

The monthly report said despite high inflation, some positive signals appear as a result of the government's policies.

“For instance, the current account of the BOP turned into a surplus. This might improve the external financing constraint, contribute to more exchange rate stability, and promote confidence in the economy.

“Further, successful completion of IMF program will pave the way to attract more capital inflows, further stabilisation in the exchange rate and alleviating the inflationary pressures,” it added.

During the month of March, remittances from Overseas Workers increased by 27% on MoM basis to $2.5 billion in March 2023 as compared to $1.99 billion in February 2023. On account of “improved situation after exchange rate adjustments, Ramzan and Eid factor played an instrumental role to attract higher proceeds.”

“All above favourable factors have been translated in current account which turned to surplus of $654 million in the month of March, this is the level observed after November 2020,” said the report.

The report projected that during the month of April, imports are expected to increase “at higher level as compared to March due to government decision for some relaxation in pro-growth imports, to stimulate domestic economic activities”.

“However, remittances will remain at same level as observed in March. Accordingly, all these factors will contribute in curtailing the overall current account deficit,” added the report.

Comments

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dr saleem Apr 29, 2023 03:56pm
please update price list
thumb_up Recommended (1)
usman Apr 29, 2023 05:05pm
@Tulukan Mairandi, seems that people across the border are worried about their diminishing role in the region.
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Dr. Omer Javed Apr 29, 2023 07:27pm
My article underlines the need for media & policymakers in Pakistan, in general, to understand that shock therapy neoliberal market reform is not the right course of action; instead, there is need for non-neoliberal, dual-track, gradual policy approach. https://www.brecorder.com/news/40239268
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Dr. Omer Javed Apr 29, 2023 07:41pm
Unwarrented policy of acute monetary, & fiscal austerity- high policy rate, & low development spending- inadeq. structural reforms on energy & SOEs side, lack of progressive taxation, low IMF's SDR allocation, & insignificant debt relifef are main reasons. What the report suggests are broadly its consequences - 'key drivers are food and energy price hikes. ...currency depreciation and rising administered prices have contributed to jack up overall price level'.
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Ismail Khan Apr 29, 2023 08:30pm
Its great opportunity
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Usama Ashfaq Apr 29, 2023 09:55pm
Still we are suffering and for the best.
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Haq Apr 29, 2023 11:04pm
Dysfunctional system. Debt (external, internal, circular), interest, salaries, pensions, perks, subsidies, SoE liabilities.... An opportunity to bury is colonial era rotten pro-elite structure & switch to transparent Islamic (based upon Quran & Sunnah) welfare state of Pakistan
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Anokha_Laadla Apr 30, 2023 05:18am
The fact that Indians here on this forum ,are mostly fixated on Pakistan to compare with their progress , is a sign of no real progress .
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