August economic outlook: Inflation expected to remain elevated at 10-11pc

ISLAMABAD: Inflation is expected to remain elevated at 10-11 percent in August 2026 amid global commodity and energy price pressures, while declining foreign direct investment, a deepening contraction in private-sector credit, and looming climate risks from heavy rains and floods pose fresh threats to economic growth, agricultural output, inflation, and the external account. This has been noted in the monthly Economic Update & Outlook August 2026, released by the Finance Division on Monday, which further stated that risks remain, particularly from geopolitical uncertainty, global energy prices, and their potential implications for inflation and the external account. Continued prudent macroeconomic management and reform implementation will therefore remain important to safeguard stability and sustain the growth momentum into fiscal year 2027, it added. The outlook noted that maintaining policy discipline and advancing structural reforms will be important for sustainable and inclusive growth, strengthen the economy’s resilience to external shocks, and preserve the gains of macroeconomic stability. The Economic Update highlighted a sharp 21 percent contraction in FDI, with inflows dec