Pakistan’s central bank expects the country’s real GDP growth to fall in the range of 2-3% in FY24, it said in its annual economic report on Monday.

“The lagged impact of monetary tightening, and other contractionary measures, is expected to keep domestic demand in check,” the SBP said.

The central bank added that the prospects of improvement in supply situation on account of likely increase in production of important crops and imports was expected to bring down inflation in the range of 20 to 22 per cent.

“Slightly improved global and domestic growth prospects are expected to bolster foreign exchange earnings from exports of goods and services.”

Although import volumes were likely to increase, the bank said that lower commodity prices might prevent a significant expansion in imports bill during FY24.

The SBP also said it expected a fiscal deficit ranging from 7 to 8% and the current account deficit to fall in the range of 0.5 to 1.5 per cent of GDP in FY24.

The report highlighted that Pakistan’s economic situation has started to show some early signs of improvement as the country was able to secure a $3 billion stand-by arrangement (SBA) from IMF, towards the end of FY23, which helped in alleviating near-term risks to external sector.

“The high frequency indicators are suggesting bottoming out of economic activity from July 2023. The withdrawal of guidance on import prioritisation, alongside gradual ease in FX position, is expected to somewhat ameliorate supply chain situation and lift growth in LSM as well as exports. Moreover, an expected rebound in cotton and rice production will support agriculture growth in FY24.”