A year of recovery, economic survey FY24

Overview of Pakistan’s economic performance

Introduction

The Pakistan Economic Survey for FY24 was recently presented by the Finance Minister and other government officials, providing a detailed analysis of the country’s economic performance during the fiscal year.

Key Highlights

• Disinflationary Trend: The survey reports a noticeable disinflationary trend due to stable interest rates, a contained current account balance, and improved flows from exports and remittances.
• Fiscal Challenges: Despite facing a significant budget deficit, the government managed a primary surplus for the first nine months of FY24, hinting at the possibility of an annual primary surplus, a feat not achieved since FY04.

Economic outlook for FY25

Government Strategy

• The government plans to continue prudent measures, with an emphasis on privatization to sustain fiscal consolidation.
• The Finance Minister is optimistic about improving the external balance due to an anticipated IMF program and stability in the current account balance, projected to close at around USD 200 million in FY24.

Monetary Easing

• The initiation of monetary easing, announced recently, indicates a slowing Consumer Price Index (CPI) trajectory. The pace of further easing will depend on the State Bank of Pakistan’s assessment of the evolving situation.

GDP and sectoral performance

GDP Growth

• Recovery: After a contraction in FY23 due to floods and regulatory measures, GDP expanded by 2.4% in FY24.
• Sectoral Contribution: The agricultural sector led the growth with a rebound in major crops, achieving record-high yields in sugarcane, rice, and wheat.

GDP Segment-wise Growth	FY23	FY24P
Overall GDP	-0.21%	2.38%
Agriculture	2.27%	6.25%
Major Crops	0.34%	11.03%
Industrial	-3.74%	1.21%
Services	-0.01%	1.21%

Agricultural Sector

• The sector saw a significant rebound in major crops from a low base set in FY23, with record-high yields in sugarcane, rice, and wheat.

Crop Production (000 Tonnes)	FY23	FY24P
Sugarcane	87,981	87,638
Rice	7,322	9,869
Wheat	28,161	31,438

Current account balance

Improvement and Management

• The strategy of prioritizing imports and balancing inflows with outflows kept the current account balance close to break-even for the first ten months of FY24.
• Continued external account management is expected to keep the current account deficit under USD 2.5 billion for FY25.

Current Account Balance (US$ mn)	FY24	FY25E
Balance	-202	-2,400

Inflation trends

Disinflation

• The CPI showed significant disinflation over a high base from the previous year, supported by high interest rates.
• The average CPI for 11 months of FY24 was 25%, compared to 29% in FY23.

Inflation Rates	FY23	FY24 (11M)
CPI	29%	25%
Food Inflation	39%	24%
Core Inflation	20%	20%

Fiscal and debt dynamics

Primary Surplus

• Fiscal accounts for the first nine months of FY24 show a primary balance deficit of 1.5% of GDP, with the potential for an annual primary surplus.

Debt Profile

• Pakistan’s domestic debt reached 41% of GDP, with interest payment expenses consuming almost half of the country’s revenue.
• External debt constituted 23% of GDP, primarily long-term bilateral and multilateral loans.

Debt Profile (% of GDP)	FY23	FY24E
Domestic Debt	46%	41%
External Debt	29%	23%

Disclaimer:

The information in this article is based on research by JS Global. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.