ISLAMABAD: Despite inflation trending upward in the current month and challenges facing the current seasonal crops, the government on Friday expressed hope for encouraging and sustainable growth prospects based on budgetary measures for the next fiscal year.
“Inflation expectations for June rose slightly compared to the previous month but remain well below the levels of the same month last year. This increase is primarily due to higher prices of perishable goods due to Eid al-Adha,” the Finance Ministry said in its monthly report on Friday. Economic update and forecasts.
In its “Monsoon Agricultural Climate Outlook for June-August 2024,” the Pakistan Meteorological Department advised farmers to take measures based on recent extreme heat wave events. The amount of available soil moisture is currently under pressure in most parts of the country.
“Seasonal crops such as cotton, groundnuts, sugarcane, seasonal vegetables and orchards are water-stressed and require additional irrigation in most parts of the country,” the finance ministry added.
The report claimed that FY24 concludes with “an economic stabilization path accompanied by improved macroeconomic indicators.” It added that easing inflationary pressures, stabilization of external accounts and the exchange rate, fiscal consolidation, and a gradual recovery in industrial activities have restored the confidence of economic agents, facilitating economic growth.
Expectations say that economic stability has led to an improvement in key indicators in fiscal year 2024
The Finance Ministry said the 2024-25 budget aims to transition to an era of sustainable and inclusive growth, with the government focusing on high-potential sectors such as information technology, small and medium enterprises, mining and minerals, tourism, exports and agriculture. These sectors can generate huge profits and support the country’s balance of payments position.
The ministry expressed its hope that “to complement this, fiscal discipline and effective implementation of the domestic growth programme, along with bilateral and multilateral cooperation, will necessitate a sustainable potential growth path in the coming years.”
The government has claimed that it is responsible for reducing fuel prices recently, although it did not stop at that, but rather transferred the impact of global prices to the government. On the other hand, the government is never responsible when prices rise at rates higher than the rates of price reduction.
It said it was “implementing various administrative, policy and relief measures to control inflationary pressures. Notably, the government had reduced petrol prices by Rs 4.74 per litre and diesel by Rs 3.86 per litre on June 1, with further cuts of Rs 10.20 per litre for petrol and Rs 2.33 per litre for diesel effective June 15. These measures, along with efforts to enhance food availability, reflect the government’s commitment to curb inflation.
The report did not mention the measures taken to enhance the availability of food, although it allowed the export of sugar while its prices were rising and pressure was already under way to allow the export of wheat. “By managing supply and demand, the government aims to stabilize prices, mitigate market volatility, and provide a more optimistic outlook on inflation,” the report said.
Meanwhile, the ministry cited the Food and Agriculture Organization’s Food Price Index, a key indicator tracking the prices of globally traded food commodities, which recorded a 0.9% increase in May compared to the revised April level.
“This is the third straight monthly increase after seven months of declines. However, it remains down 3.4% from a year ago. -13.5 pieces.”
The report noted moderate growth in broad-based manufacturing of 0.45% during the July-April period of FY24, and expected this “turnaround” to continue in the coming months on the back of stimulating external demand, improving business confidence, and the removal of import restrictions.
Moreover, easing inflationary pressures and shift in monetary policy are likely to boost business confidence, and thus LSM is expected to be on an upward growth trajectory in the remaining months of FY24 and the next fiscal year.
He also said that economic activities gained momentum during the second half of FY24, attributing this to the downward trend in inflationary pressures, stability in external accounts, gradual recovery in industrial activities due to various policy and administrative measures taken by the government, coupled with improved external demand.
Published in Al-Fajr, June 29, 2024