According to the finance ministry’s monthly economic update released on Friday, Pakistan is expected to experience inflation ranging from 22.5% to 23.5% in March. The ministry anticipates a further decline in inflation in April.
Pakistan’s economy, valued at $350 billion, has been grappling with high inflation and sluggish growth for over a year.
In 2023, it narrowly avoided default with a last-minute, short-term bailout program from the International Monetary Fund (IMF).
Despite recent increases in fuel prices and the onset of the Muslim holy month of Ramazan, known for increased consumer spending, the ministry’s report suggests a moderate inflation outlook for March.
It attributes this to the high base effect and February’s record-low monthly inflation of 23.1%, the lowest since June 2022. Inflation had remained around 30% for over a year and peaked at 38% in 2023.
The report forecasts a gradual easing of inflation in April to a range of 21-22%, citing favorable domestic and global factors. Although Pakistan’s economy contracted by 0.17% in the last financial year, the report notes signs of growth in the current year, particularly in the agriculture sector.
The ministry underscores the importance of sustained fiscal consolidation, along with increased foreign investment and remittances, to support a sustainable economic recovery and meet external financing needs.
Pakistan is expected to approach the IMF soon for a longer-term program, following a staff-level agreement for the second and final review of its nine-month, $3 billion program earlier this month.
