Inflation Could Rise Slightly by March 2025: Finance Ministry

The federal government has forecasted inflation to remain within the range of 3 percent to 4 percent by March 2025. According to the Economic Update and Outlook February 2025 released by the Ministry of Finance, Pakistan’s economy has continued to demonstrate positive developments during July-January FY2025 which “indicate positive prospects for economic growth in coming months”. The finance ministry has predicted inflation to remain within the range of 2.0-3.0 percent for February 2025, however, there are prospects of a slight increase to 3.0-4.0 percent by March 2025. The fiscal performance during H1- FY2025 is reflective of the government’s effective consolidation measures, which resulted in better expenditure management and improved resource mobilization. In January, LSM growth is expected to be supported by rising imports of machinery and raw materials, along with increased cement dispatches. Moreover, a decline in inflation and the accommodative monetary policy are likely to further boost business confidence to support the LSM recovery. The Finance Ministry said these measures are expected to contain the fiscal deficit at a lower level than the previous year while ensuring fiscal discipline. Similarly, with contained non-markup expenditures, the primary surplus is expected to improve further in the coming months. On the external front, exports, imports, and workers’ remittances are expected to maintain their upward trend. In the coming months, remittances are likely to increase further due to seasonal factors such as Ramadan, Eid-ul-Fitr & Eid-ul-Adha. Similarly, exports and imports are projected to improve due to the expansion in economic activity. All these factors will help to keep the Current Account Deficit within manageable limits, the finance ministry added.