ISLAMABAD: Expre­ssing concerns over cotton production and confusing signals from the manufacturing sector, the government expressed “cautious optimism” on Wednesday about sustainable economic recovery and a further deceleration in inflation.

“Inflation will remain within the range of 6-7 per cent in October and further down to 5.5-6.5pc in Nove­mber,” said the Mini­s­try of Finance (MoF) in its Mont­hly Economic Update and Outlook for October.

It said the country’s economy demonstrated sustai­ned recovery during the first quarter of FY25. “Stab­ility in both the fiscal and external sectors has be­en maintained, suppor­ted by significant financial infl­o­ws”, said the MoF while poi­nting out the disbursement of the first tran­che of $1.03 billion under the Extended Fund Faci­lity (EFF) programme of the Int­e­rnational Monetary Fund.

Sees inflation at 6-7pc for October; falling cotton output key concern

A day earlier, the Min­istry of Economic Affairs reported a 60pc drop in foreign assistance inflows to $2.3bn in the first quarter (July-September) of the current fiscal year against about $5.73bn last year.

The MoF said the appr­oval of the IMF programme reinforced macroeconomic stability and expected that the ’successful hosting of SCO summit in Pakistan wou­ld pave the way for busi­ness and market confidence.

Click to see more

The report conceded that cotton production remai­ned a concern but hoped that the agriculture sector’s push toward mechanisation and better resource management offered a pro­mising outlook for FY25. It said the agriculture sector benefited from mechanisation-based productivity as indicated by a 116pc surge in the import of agricultural machinery to $29.7m during the first quarter.

The MoF confirmed a 17pc decline in urea offtake and 15pc in DAP fertiliser during Kharif. However, it said the overall fertiliser production increased year-on-year by 3.7pc to 2.45m tonnes during July-September FY25 as water availability remained satisfactory. During July-August FY25, the production of wheat threshers increased by 22.8pc over last year. “All these factors will positively impact the growth of the agriculture sector,” the MoF said.

“Large-scale manufacturing (LSM) continues to show mixed signals, with YoY growth remaining negative, yet MoM growth indicating signs of recovery,” said the MoF, adding that industrial output was gradually stabilising, and key sectors were beginning to ramp up production.

Published in Dawn, October 31st, 2024