Economy shows impressive growth in first half fiscal year: finance ministry

With GDP expansion by 2.5 percent, Pakistan’s economy is showing impressive growth with a positive trajectory in the first half of the fiscal year 2024-25, according to the finance ministry.

The finance ministry reported on Monday that the positive momentum of the economy was fueled by sound macroeconomic management, effective inflation control procedures, and enhanced fiscal and external account stability.

Supported by easing global prices, inflation substantially declined to 7.2 percent in H1-FY2025 from 28.8 percent in 2023-24, aided by a stable exchange rate and targeted government policies, the finance ministry said in the report.

The foundation for sustainable economic momentum was further strengthened by policy reforms, monetary easing, and fiscal consolidation, as stated in the Economy Half-Yearly Report.

The report further states that the agricultural sector grew by 6.2 percent in FY2024, buoyed by increased investment, higher agricultural credit, and favorable weather conditions, while high-frequency indicators signal a positive outlook for future growth.

Economic signals, including machinery imports, investment, and water availability, suggest a positive direction for future growth in the national economy. The industrial sector exhibited mixed results; for example, the textile sector has shown improvement.

Driven by the recovery of domestic activity and growth in trade, the services sector is projected to continue its positive trajectory, while the current account balance posted a surplus of $1.21 billion in Jul-Dec FY2025.

According to the finance ministry, Foreign Direct Investment (FDI) surged by 20 percent, driven by investments in the power and oil sectors. Foreign exchange reserves are sufficient to cover over two months of imports, supported by IMF disbursements and international economic assistance.

The Pakistani rupee gained 1.2 percent, indicative of favorable external developments. The government has been able to reduce the fiscal deficit to 0.04 percent of GDP in Jul-Nov FY2025, a marked improvement from the previous year’s shortfall.

As claimed by the finance ministry, with strengthened economic fundamentals, declining inflation, and growing investor confidence, Pakistan is well-positioned for continued growth momentum throughout the fiscal year.