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ISLAMABAD: Anticipating the new fiscal year to begin with double-digit inflation, the government on Thursday expressed concern over renewed geopolitical tensions in the Middle East, saying they posed downside risks to inflation and the external outlook.
“Renewed geopolitical tensions in the Middle East pose downside risks to inflation and the external outlook,” the Ministry of Finance said in its Monthly Economic Update & Outlook (July 2026), while assuring that the external sector would remain resilient, supported by government measures to facilitate exports and sustain the strong momentum in remittance inflows.
“Overall, prudent macroeconomic management, fiscal discipline, ongoing structural reforms, stronger industrial activity and improved external buffers are expected to sustain the recovery in economic activity while preserving macroeconomic stability,” the finance ministry said, adding that macroeconomic stabilisation had largely been achieved in FY2026.
It said the economy was expected to maintain its growth momentum in the current fiscal year, supported by “improving macroeconomic fundamentals, continued expansion in the manufacturing sector, fiscal consolidation, resilience in agriculture and a stable financial environment”.
