Islamabad, Jul 6 (IANS): Pakistan's macroeconomic environment in the calendar year 2023 remained challenging amid rising inflation, weak foreign exchange inflows, pressures on external account and local currency, and low business confidence, particularly in the first half, the State Bank of Pakistan (SBP) said.

However, the policy measures and regulatory interventions that were taken to address growing imbalances coupled with securing a nine-month stand-by agreement from the International Monetary Fund (IMF) helped improve the macroeconomic conditions in the second half of 2023, the SBP said in its financial stability review for 2023, Xinhua news agency reported.

Inflation started falling, economic growth recovered, and the exchange rate stabilised towards the year-end, the central bank said in the report.

Against this backdrop, the financial sector exhibited strong growth and performance, and maintained financial soundness and operational resilience, it added.

The asset base of the financial sector expanded by 27 per cent in 2023, mainly driven by the banking sector, according to the report.