Inflation to fall in January, fluctuate in coming months: SBP chief

KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad Thursday predicted further fall in inflation during the month of January.

However, inflation rate may fluctuate in the months after January, he said while speaking at the Federation of Pakistan Chambers of Commerce & Industry (FPCCI). He sounded optimistic about further stabilisation in economy and noted the country was meeting its economic targets, with its debt level and balance of payments still under control.

He talked about the significant reduction in inflation, which dropped from a staggering 38pc earlier in the year to 4.1pc in December 2024.

Jameel said the SBP remains committed to achieving its inflation targets, a move expected to provide long-term economic stability. However, he cautioned that volatility in inflation could pose challenges for businesses and households in the near term.

About the current account situation, the SBP governor termed the situation encouraging as significant improvements had been witnessed due to rising remittances and exports.

While acknowledging the growth in remittances, which are projected to comfortably reach $35 billion by the fiscal year end, he stressed the importance of boosting exports to ensure sustainable economic stability. Without a consistent rise in export volumes, the country might continue to face challenges in managing its current account and balance of payments.

About the foreign debt, the SBP governor revealed that Pakistan’s external debt remained stable, standing at $100.8 billion as of September 2024, with the marginal increase attributed to revaluation adjustments. He noted that the biggest challenge faced by the authorities was the balance of payments; however, he said the country had enough dollars to meet external demands. He pointed out that the issue of balance of payments rises “when we exceed growth by 4pc and we don’t have the foreign exchange component capacity to meet that, then growth becomes unsustainable. “Growth should be sustainable because if it’s not sustainable, we will be back to square one,” he said, highlighting that exports would need to be increased to make growth sustainable. On the business side, the SBP chief hoped business confidence would improve and foreign direct investment would follow once the economy improved.