After inflation hit a new peak at 12 percent in June, the government anticipates a reduction in inflationary pressures moving into the upcoming fiscal year following the reopening of the Strait of Hormuz. According to a Ministry of Finance report on its Monthly Economic Update and Outlook for June 2026, improved global market sentiment due to easing geopolitical tensions is expected to lower international crude oil prices.
The ministry noted that this reduction would help reduce imported inflationary pressures, thereby lowering domestic fuel and transportation costs. They projected that the June CPI measurement would remain within the range of 11-12 percent despite the anticipated rise in inflation.
Additionally, the report highlighted the positive impact on Pakistan’s external account through containing the oil import bill. The ministry also emphasized that improving macroeconomic fundamentals, sustained growth in manufacturing, particularly large-scale manufacturing, a stable external account, fiscal discipline, and resilience in agriculture would support economic growth.
In terms of domestic policies, it suggested continued prudent macroeconomic measures, targeted support for productive sectors, and fiscal consolidation to sustain economic momentum while maintaining stability. The ministry also mentioned the strengthening outlook for the external sector supported by record workers’ remittances and continued IT exports, which they forecasted would bolster the balance of payments and enhance resilience against potential shocks.
Overall, the Ministry of Finance concluded that with reduced geopolitical risks, there was optimism for a more favorable economic climate moving forward in Pakistan’s fiscal year 2027-28.
Source: Original report
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