The Ministry of Finance Pakistan has warned of rising inflation risks due to tensions in the Middle East, projecting price growth between 7.5 and 8.5 per cent for the current month.

In its monthly economic update and outlook report, the ministry said higher global oil prices could increase industrial costs and widen the import bill.

Despite global uncertainty, the report described Pakistan’s near-term economic outlook as “cautiously optimistic,” with early signs of recovery in the industrial sector.

Imports of textile machinery and construction materials have increased, indicating improving economic activity.

The ministry also expects higher remittances from overseas Pakistanis, noting a 10.5 per cent increase during the first eight months of the fiscal year, although exports declined by 5.4 per cent in the same period.

Improvement in IT exports is supporting foreign exchange reserves, while the current account deficit is expected to remain under control.

According to the ministry, the State Bank of Pakistan’s foreign exchange reserves have reached $16.4 billion, marking a key step towards economic stability.