Qudsia Bano

The Finance Division has released its monthly update for May 2024, highlighting various economic indicators and their performance over the fiscal year, reports WealthPK. According to the update, Large Scale Manufacturing (LSM) experienced a slight decline of 0.1 percent during Jul-Mar FY2024, compared to a 7.0 percent contraction during the same period last year. However, in March 2024, LSM saw a year-on-year increase of 2.0 percent – a significant improvement from the 26.4 percent decline in March 2023. On a month-on-month basis, LSM decreased by 9.4 percent in March, following a 3.1 percent decrease in February. Notably, 11 out of 22 sectors, including food, apparel, and pharmaceuticals, exhibited positive growth. Auto industry remained subdued, with car production and sales dropping by 31.8 percent and 29 percent, respectively, and truck and bus production and sales declining by over 40 percent. Conversely, tractor production and sales saw substantial increases of 54.7 percent and 56.6 percent, respectively. Petroleum products' sales dropped by 11 percent in the first 10 months of FY2024, although April 2024 saw a 6.0 percent year-on-year decrease.

Cement dispatches showed a modest increase of 2.45 percent during Jul-April FY2024, with exports rising significantly by 65.35 percent, although domestic dispatches fell by 4.12 percent. Inflation rates demonstrated a positive trend, with CPI inflation recording 17.3 percent year-on-year in April 2024, down from 20.7 percent in March and significantly lower than 36.4 percent in April 2023. The major contributors to this inflation included housing, water, electricity, and gas at 35.7 percent, and perishable food items at 28.5 percent. The fiscal deficit for Jul-Mar FY2024 stood at 3.7 percent of GDP, matching the previous year's figure. However, the primary balance showed a surplus of Rs1615.4 billion, up from Rs503.8 billion last year. The total expenditures grew by 36.6 percent, driven primarily by a 54.0 percent increase in markup spending. Revenue collection saw a notable rise, with total revenues increasing by 41 percent and non-tax revenues growing by 90.7 percent. In the monetary sector, the policy rate was maintained at 22 percent by the Monetary Policy Committee (MPC), citing macroeconomic stabilization policies' contributions to inflation and external position improvements.

The current account deficit for Jul-Apr FY2024 was significantly reduced to $0.2 billion from $3.9 billion last year, largely due to a 10.6 percent increase in exports and a 5.3 percent decrease in imports. The foreign investment inflows reached $659.3 million during Jul-Apr FY2024, with FDI increasing by 8.1 percent to $1.5 billion. The workers' remittances grew by 3.5 percent, totalling $23.8 billion for the same period. Pakistan's total foreign exchange reserves increased to $14.3 billion as of May 24, 2024. The Pakistan Stock Exchange (PSX) showed a strong performance in April 2024, with the KSE-100 index gaining 4,097 points, closing at 71,103 points, and market capitalization rising to Rs9,747 billion. In the social sector, significant progress was made, including the signing of an MoU between BISP and Navttc to enhance technical education access and disbursement of 34,213 interest-free loans amounting to Rs1.55 billion in April 2024. The outlook for inflation in May 2024 appears promising, supported by improved domestic supply chains, reduced transportation costs, and consistent administrative measures by the government. Notably, the Food and Agriculture Organization's food price index recorded a slight increase in April 2024, indicating a cautious but positive trend in global food commodity prices.

Credit: INP-WealthPk