In its latest Monthly Economic Update and Outlook (June 2025), the Ministry of Finance stated that consumer price index (CPI) inflation for June is expected to fall within the range of 3 to 4 percent.
This comes after the ministry had earlier signaled an upward trend in inflation for May and June, citing concerns over slower growth in Large-Scale Manufacturing (LSM). Data from the Pakistan Bureau of Statistics revealed that year-on-year inflation reached 3.46 percent in May 2025, the highest since December, indicating a reversal after several months of declining inflation.
Director of research at AKD Securities, Awais Ashraf, noted that the ministry’s inflation outlook aligns with their own estimates. “We had projected inflation to come in at around 3.2 percent for June,” he said.
The report also highlighted a positive outlook for LSM in the coming months, backed by improvements in high-frequency indicators such as cement dispatches and automobile sales. In May, sales of passenger cars, SUVs, pickups, and vans rose to 14,762 units, marking a 35 percent increase year-on-year and a 39 percent rise month-on-month.
However, LSM performance remained mixed in April 2025, with a year-on-year increase of 2.3 percent but a month-on-month contraction of 3.2 percent.
The ministry noted that increased lending to private businesses reflects stronger production activity and growing investor confidence.
On the external front, the report pointed to a continued improvement in the current account surplus during July to May of FY2024-25, primarily due to a rise in remittances and exports. These factors are expected to maintain the current account surplus through the remainder of FY2025.
Regarding agriculture, the ministry highlighted that improved access to quality seeds and increased mechanisation are expected to enhance productivity. Between July and April of FY2025, imports of agricultural machinery rose by 10 percent, amounting to $69.2 million, indicating an uptick in mechanisation efforts.
Earlier this month, Finance Minister Muhammad Aurangzeb presented the Pakistan Economic Survey 2024-25, expressing confidence that GDP growth for the fiscal year would reach 2.7 percent.
The National Accounts Committee reported GDP growth rates of 1.37 percent for Q1, 1.53 percent for Q2, and 2.4 percent for Q3 of FY25. To meet the annual 2.7 percent target, the economy would need to grow by 5.5 percent in the final quarter (April-June). Despite this goal, the projected growth remains below the 3.6 percent target, making it the third consecutive year the government has fallen short of its economic growth objective.
