Pakistan sees mixed economic signals in monthly outlook report

ISLAMABAD: The Ministry of Finance has released its latest Monthly Economic Outlook report, highlighting a blend of promising gains and ongoing challenges as the country reaches the end of the ongoing fiscal year.

According to the report, record-breaking remittances, a surge in exports and imports, and a significant rise in tax and non-tax revenues have provided a boost to the national economy. At the same time, foreign investment, industrial output, and the value of the rupee have seen notable declines.

One of the most striking indicators is the 28.8 per cent increase in remittances, which rose from $27 billion to nearly $35 billion during the first 11 months of FY2024–25. This substantial inflow is being attributed to improved global economic conditions and greater trust in formal financial channels.

Exports saw an annual increase, but registered a sharp month-on-month decline, with May 2025 exports dropping to $2.4 billion compared to over $3 billion in May 2024. Imports, meanwhile, increased by more than 11 per cent over the fiscal year, reflecting a rebound in domestic demand but also raising concerns over the trade balance.

Foreign investment fell by 14.4 per cent, underscoring persistent investor uncertainty despite recent macroeconomic stabilisation efforts. However, the fiscal situation has improved notably. The fiscal deficit narrowed, and the primary balance remained in surplus, signalling better fiscal management.

Revenues collected by the Federal Board of Revenue (FBR) increased by 25.9 per cent, while non-tax income soared by 68.1 per cent, both contributing to improved fiscal space.

The inflation rate averaged 4.6 per cent over the 11-month period – a positive sign compared to the double-digit inflation of previous years. The report also shows that the policy rate was reduced from 20.5 per cent to 11 per cent, reflecting easing inflationary pressures over time.

The rupee depreciated by Rs 5.03 against the US dollar compared to the previous fiscal year, the report adds.

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