Business & Finance Print edition: 2026-07-01

External pressures mount: FD projects 11-12pc headline inflation this month

Published July 1, 2026 Updated July 1, 2026 05:57am

2 min

By Tahir Amin

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ISLAMABAD: The Finance Division has projected headline inflation at 11-12 percent in June 2026 amid mounting external sector pressures, with foreign direct investment (FDI) dropping 28.4 percent, exports declining 5 percent and imports increasing 8 percent during the first 11 months (July-May) of fiscal year 2025-26.

The Division uploaded both the May and June Outlook on the last day of fiscal year 2025-26 thereby raising obvious questions as to whether the May data was available to the budget formulators particularly with reference to a further plunge in portfolio investment to negative 1.145 billion dollars July-May though PSX index rose by 43.3 percent.

The Division in its ‘Monthly Economic Update and Outlook June 2026’ stated that with geopolitical risks receding, global energy prices moderating, inflationary pressures easing and external buffers improving, Pakistan’s economic outlook remains favourable, with growth expected to strengthen while maintaining macroeconomic stability.

The Economic Update highlighted a sharp 28.4 percent contraction in FDI, with inflows declining from usd2.267 billion to usd1.623 billion, while exports also fell 5 percent to usd28.2 billion from usd29.8 billion during July–May fiscal year 2025-26 compared with the same period of the preceding fiscal year. The downward trend continue in May 2026 when it declined to USD214.3 million against USD231.9 million in May 2025.

Main sources of net inflows were China (usd819.0 million) and Hong Kong (usd308.4 million). Sector-wise, power (usd871.4 million) and financial services(usd718.5 million) attracted the most FDI.

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