ISLAMABAD: Pakistan’s Ministry of Finance has released its Monthly Economic Outlook Report, projecting inflation to remain between 9% and 10% in July 2026, while highlighting continued economic improvement alongside external risks facing the country’s economy.
According to the report, inflation eased to 11.1% in June 2026, down from 11.7% in May, while the average inflation rate for the fiscal year 2025–26 stood at 7.1%.
The ministry noted that the ongoing tensions between the United States and Iran continue to pose risks to global energy prices and international financial markets, warning that geopolitical uncertainty could affect economic stability.
Pakistan’s remittance inflows reached US$41.6 billion during fiscal year 2025–26, reflecting an 8.6% year-on-year increase and providing continued support to the country’s external account.
The report stated that Pakistan’s total foreign exchange reserves stood at US$22.7 billion as of July 17, 2026, with the State Bank of Pakistan holding US$17.3 billion in reserves.
The outlook also warned of below-normal rainfall between July and September, raising concerns over water shortages for the Kharif crop season. It cautioned that reduced rainfall could negatively impact major crops, including cotton, rice, sugarcane, and maize.
On the industrial front, the report showed that Large-Scale Manufacturing (LSM) grew by 5.8% during the July–May period, indicating continued recovery in industrial activity.
Meanwhile, the Federal Board of Revenue (FBR) collected Rs13.01 trillion in taxes during fiscal year 2025–26, marking a 10.8% increase compared to the previous year.
The ministry further reported that the fiscal deficit remained contained at 1.6% of GDP during the July–May period, reflecting continued fiscal discipline.
The latest outlook suggests that while Pakistan’s economy continues to show signs of stabilization through stronger remittances, improved tax collection, and industrial growth, inflationary pressures, geopolitical developments, and climate-related risks remain key challenges in the months ahead.
