Pakistanis can expect some relief on external payments but may face a pinch at the grocery store in the coming year, according to a recent forecast by Fitch Ratings.
Fitch predicts a 12% inflation rate, which means everyday goods will likely become more expensive. However, the government’s budget is seen as a positive step towards controlling Pakistan’s finances. This tighter budget aims to impress the International Monetary Fund (IMF) and potentially lead to a more favorable agreement.
While the budget might tighten belts, it’s not expected to strangle growth entirely. Fitch forecasts a modest 3% growth rate for the next financial year, slightly lower than earlier projections.
There’s a glimmer of hope for Pakistan’s external accounts. The gap between exports (what Pakistan sells abroad) and imports (what Pakistan buys from abroad) is expected to shrink. This is thanks in part to a more disciplined budget that could reduce the government’s borrowing needs. Additionally, a stronger foreign exchange system and a boost in agricultural exports are contributing to a healthier external situation.
Fitch believes the upcoming budget might offer some debt relief, which would provide further financial stability. However, the ratings agency remains cautious about the government’s ability to meet all its financial goals.
