Inflation Expected to Rise Further, Global Energy Prices Pose Risk to Economic Stability
Finance Ministry expects inflation to remain between 10 and 11% in August, while foreign investment and private-sector lending also declined
Islamabad: The Finance Ministry has warned of a possible further increase in inflation, identifying global energy prices and geopolitical developments as major risks to Pakistan’s economic stability.
According to the ministry’s monthly Economic Outlook report, inflation stood at 11.1% in June and 9.2% in July. The report expects inflation to rise again to between 10% and 11% in August, with the rate likely to remain elevated in the coming months.
The report identified global energy prices and geopolitical tensions as major risks to the economy, while stressing the need for cautious policies, fiscal discipline and continued structural reforms.
The Finance Ministry said that foreign direct investment and lending to the private sector declined during the last fiscal year. However, non-tax revenue, including the petroleum levy, increased by 2.4% to Rs5.178 trillion.
Pakistan also achieved a primary budget surplus for the third consecutive year. According to the report, remittances reached $41.6 billion, while exports stood at $30.8 billion. Merchandise exports increased by 9.4% year-on-year.
IT exports also recorded significant growth, rising 17.8% year-on-year to $417 million in July.
The report said the primary budget surplus reached 2.9% of GDP in fiscal year 2026, while the fiscal deficit declined to 2.6%, the lowest level in more than 20 years.
Meanwhile, international rating agency Moody’s upgraded Pakistan’s credit rating from Caa1 to B3 and maintained a stable outlook.
The Finance Ministry said strong economic fundamentals, fiscal discipline and a stable financial environment could provide further support to the country’s economic recovery.
