Inflation likely to remain at 11–12% in June as exports and FDI decline

The Ministry of Finance has projected that inflation will remain in double digits during June, estimating the Consumer Price Index (CPI) to range between 11% and 12%

ISLAMABAD: The Ministry of Finance has projected that inflation will remain in double digits during June, estimating the Consumer Price Index (CPI) to range between 11% and 12%, according to its latest Monthly Economic Outlook Report.

The report indicates that despite signs of improvement in several macroeconomic indicators, inflationary pressures continue to weigh heavily on households, keeping the cost of living elevated. The ministry acknowledged that prices are expected to remain high in June, reflecting persistent challenges facing the economy.

According to the report, Pakistan’s export sector also witnessed a decline during the first 11 months of the outgoing fiscal year. Exports from July to May were recorded at $28.2 billion, compared with $29.8 billion during the corresponding period of the previous fiscal year, representing a decrease of nearly 15%.

The decline in exports highlights the difficulties faced by the country’s external sector amid slowing global demand, rising production costs and continued economic uncertainty.

The report also revealed a sharp fall in foreign direct investment (FDI). During the July–May period, Pakistan attracted $1.62 billion in FDI, marking a 28.4% decline compared to the same period last year. The reduction in foreign investment reflects cautious investor sentiment despite recent economic stabilisation efforts.

Despite these challenges, the Ministry of Finance maintained that Pakistan’s overall economic outlook has shown signs of improvement. The report stated that the country’s economy achieved an estimated 3.7% growth rate, supported by better performance in key sectors and improved macroeconomic stability.

The ministry noted that workers’ remittances continued to rise, providing crucial support to the country’s external account, while the information technology sector maintained strong export growth, helping offset weaknesses in traditional export industries.

Looking ahead, the Finance Ministry expressed optimism that economic growth will strengthen further during the new fiscal year. It said continued growth in remittances, expanding IT exports, improving fiscal management and greater macroeconomic stability are expected to support economic recovery and enhance investor confidence.

However, the report stressed that sustaining this momentum will require continued structural reforms, prudent economic policies and measures aimed at containing inflation while encouraging investment and export-led growth.