Pakistan sees rise in inflation as investment declines sharply

Inflation in Pakistan rose to 5.7% during the first nine months of the current fiscal year, up from 5.3% in the same period last year, according to the Ministry of Planning’s monthly development report.

The report highlights mixed economic trends, showing pressure on key external and domestic indicators. Exports declined by 1.2%, while imports increased by 8.3%, widening concerns over the country’s trade balance. At the same time, foreign direct investment fell sharply by 33.4%, reflecting continued investor caution amid economic uncertainty.

Despite external account pressures, tax collection by the Federal Board of Revenue increased by 10.1%, reaching Rs 9,306 billion compared to Rs 8,453 billion in the same period last year. This suggests improved revenue performance driven by stronger enforcement and economic activity.

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Remittances from overseas Pakistanis also showed positive growth, rising by 2.8% to $30.3 billion. This inflow remains a critical source of foreign exchange support for the country’s economy.

According to the report, Pakistan’s exports during July to March stood at $30.6 billion, slightly lower than $30.9 billion recorded in the previous year. Meanwhile, imports rose significantly to $56.3 billion from $51.9 billion, further expanding the trade deficit.

Economists note that rising imports combined with declining investment and modest export performance could pose challenges for external stability. However, strong remittances and improved tax collection have provided some buffer to the economy.

The overall picture reflects a mixed economic outlook, where fiscal improvements are being offset by external sector pressures. Analysts suggest that sustaining growth will require stronger export performance, improved investment inflows, and measures to manage import demand.

Authorities are expected to closely monitor inflation trends in the coming months, especially amid global commodity price fluctuations and domestic demand pressures.