Inflation projected to decrease to 7pc by FY2027: Finance ministry
Business
Real GDP growth is projected from 3.6 percent in FY2025 to 5.5 percent in FY2027
ISLAMABAD (Dunya News) – Inflation is projected to decrease to 7.0 percent in Pakistan over the medium term by fiscal year 2027, the Ministry of Finance said in its Debt Sustainability Analysis Report FY2025-2027.
The analysis report, which presents a comprehensive assessment of debt sustainability over the medium term, FY2025-FY2027, said the inflation would drop to 12pc in next fiscal year 2025 and to 7.5pc in FY2026.
It said the decline in inflation will primarily be driven by exchange rate stability, improved production, and a reduction in global inflation rates.
“Alongside this, the combination of optimal monetary policy, fiscal consolidation, and administrative measures are expected to play a key role in ensuring steady-state inflation,” read the report.
The exchange rate has stabilized in FY2024 against the backdrop of a favorable current account balance, and is projected to be stable over the medium term. The inflow of foreign exchange remained sound, structural reforms have been undertaken in the foreign exchange market, and the State Bank of Pakistan maintained a tight monetary policy stance; all these measures have supported the stability of the PKR. Moreover, due to the continuity of these factors, a moderate exchange rate depreciation is projected over the medium term.
“Real GDP growth is projected from 3.6 percent in FY2025 to 5.5 percent in FY2027 on account of improved external account balance and recovery in the real sector,” the report said.
It highlighted that Pakistan's economic and financial position has gradually improved in FY2024, attributed to prudent policy management and the resumption of inflows from multilateral and bilateral partners.
The country has successfully completed the IMF's Stand-By Arrangement (SBA) in April 2024, and entered in the new program of Extended Fund Facility in the first quarter of FY2025.
These positive developments increased the confidence of economic agents, leading to a boost in economic activity, it said.
