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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.
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
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