Pakistan's KSE-100 index soared 86% in 2024, making it the second best among major indexes, according to Bloomberg News. The 2024 performance of KSE-100 represents its best year since 2002 when it shot up 112%. The top 3 performing stock markets in 2024 were Argentina (114%), Pakistan (88%) and Kenya (79%), according to Topline Securities. The US markets posted double digit gains with the AI-driven tech-heavy NASDAQ-100 up 27.6%. Small and medium US companies performed well with the Russell 2000 Index edging out India's Sensex with an 8.9% return.
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| Pakistan Among Top Performing Stock Markets in 2024. Source: Bloomberg |
Clearly, the $7 billion IMF program helped restore some investor confidence in Pakistan's economy in 2024. It was also boosted by remittances from overseas Pakistanis in July-October 2024 which soared nearly 35% YoY to $11.8 billion as compared to $8.8 billion in July-Oct 2023. The fact that the KSE100 shares valuations relative to earnings still remain at historic lows (PE ratio of just 5.9) is an indication that investors have doubts about the sustainability of the economic improvements in the country. Among the top investor concerns appear to be worsening internal security situation and rising political instability.
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| History of Pakistan's KSE-100 Returns Since 1995. Source: Bloomberg |
Pakistan's macroeconomic indicators have significantly improved in 2024. Inflation has come down dramatically, from 29.7% in December 2023 to 4.1% in December 2024, resulting in aggressive monetary easing of 900 bps by the State Bank of Pakistan (SBP). The current account deficit has turned into a surplus of $729 million in November 2024 and the currency has remained stable. In spite of the run-up, the KSE-100 2025 forward PE ratio of 5.9x is still substantially below the 10-year average P/E of 8.2x.
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| Pakistan Shares Index PE Ratio. Source: Arif Habib |
Pakistan's exports grew to $16.56 billion, an increase of 10.52% in July-Dec period in 2024 over the same period in 2023, while imports grew 6.11% to $27.73 billion in this period. Pakistan's textile exports grew 9.7% in the first six months of the current fiscal year. The trade deficit in July-December FY25 increased 0.18% to $11.17 billion from $11.15 billion over the prior year. In December, the deficit jumped 34.80% to $2.44 billion from $1.82 billion in December 2023. The trade gap contracted to $24.08 billion in FY24 from $27.47 billion in the preceding year. The current account improvement was helped by remittances from overseas Pakistanis in July-October 2024 which soared nearly 35% YoY to $11.8 billion as compared to $8.8 billion in July-Oct 2023.
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| Pakistan Textile Exports. Source: Arif Habib |
In 2024, Pakistan began to make some progress to resolve the economic impact of high electricity rates and rising debt (PKR 2.1 trillion) owed to the independent power producers (IPPs). While the government terminated or renegotiated power purchase contracts (PPAs) with some IPPs, the consumers took matters into their own hands and started an unprecedented solar energy revolution.
As a result of the latest round, PPAs with five IPPs were terminated as a first step. Two of the five IPPs took haircut deals, accepting a discount of up to PKR 20 billion. 18 other IPPs face possible conversion to take-and-pay contracts, whereby the state-owned off-taker will only be liable to pay for energy consumed by the grid, eliminating capacity charges, according to a report by the Institute for Energy Economics and Financial Analysis.
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| Pakistan Solar Projects Seen From Satellites. Source: Atlas Via Bloomberg |
High power prices are fueling a massive solar buildout across Pakistan, according to a Yale360 report. Solar imports from China so far this year have already outstripped imports across all of last year, Bloomberg reports. Panels purchased in 2024 amount to 17 gigawatts of capacity, enough to raise Pakistan's total power capacity by a third. A satellite data analysis done in April by Norwegian firm Atlas revealed around 400 solar plants across the country, clustered mostly in industrial hubs. But many more installations went undetected, the geospatial analysis firm said. Most panels have been deployed almost equally across homes, factories, and farms, solar distributors say.
Related Links:
2021: A Banner Year For Tech Startups in Pakistan
Is Pakistan Ready For AI Revolution?
Digital Pakistan 2022: Broadband Penetration Soars to 90% of 15+ Population
STEM Enrollment in Pakistan Exceeds One Million
Digital Public Infrastructure in Pakistan
Solar Power Boom in Pakistan
Pakistan at 75
Growing Presence of Pakistani Women in Science and Technology
Riaz Haq's Youtube Channel
35 comments:
I think stock markets are an unreliable indicator of the underlying health of an economy, as it is driven more by "optimism" and "pessimism" than any sound reasoning.
"SBP reserves fall $371m in two weeks"
https://www.dawn.com/news/1882791/sbp-reserves-fall-371m-in-two-weeks
During the last two weeks, the SBP forex holdings witnessed an outflow of $371 million higher than the $300m loan United Bank Ltd arranged for the country recently.
The central bank reported on Thursday that the reserves fell $143m to $11.71bn during the week ended on Dec 27, 2024. The preceding week witnessed an outflow of $228m.
The State Bank said the reserves were used for external repayment obligations. The massive debt servicing has been a key hurdle that has marred economic growth despite improved remittance inflow. The remittances sent by the overseas Pakistanis are almost cost-free for the country but over 90pc is used for the debt servicing.
Pakistan will have to pay $26.1bn in debt servicing in FY25.
On Dec 31, the UBL announced that it had arranged a $300m loan for Pakistan without disclosing how much interest the country has to pay for short-term borrowing.
The government is struggling to roll over $14bn while it could not improve the economy to any sustainable level that may help it borrow from international markets.
Financial experts said the government planned to launch Euro and Panda bonds, but nothing could be done. They said the short-term $300m UBL financing would be much costlier.
It would seem that aside from weak economic fundamentals and forex reserves, the ongoing internet shutdowns and slowdowns are taking a toll on the economy as well.
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"Pakistan tops world in economic losses due to internet shutdowns"
https://www.dawn.com/news/1882972/pakistan-tops-world-in-economic-losses-due-to-internet-shutdowns
Pakistan leads the world in terms of financial losses suffered as a result of outages and shutdowns of internet and social media apps last year.
Pakistan topped the charts with a cumulative financial impact of $1.62 billion.
This was higher than the cost in countries like Sudan and Myanmar, which are ravaged by civil wars.
The report, released by Top10VPN.com, an independent VPN reviewer, said the global internet disruption lasted 88,788 hours, causing a total financial loss of $7.69bn.
For Pakistan, Top10VPN.com tracked 18 instances of deliberate internet shutdown for three major reasons — elections, “information control”, and protest — in 2024.
These disruptions lasted 9,735 hours and impacted 82.9 million users.
According to the estimate, the ongoing shutdown of social media platform X since February 18 was the costliest, with a total estimated impact of $1.34bn.
It was followed by the internet shutdowns by authorities in Balochistan between July 16 and August 21 in response to protests by the Baloch Yakjehti Committee in Gwadar. The shutdown, lasting for 864 hours, cost $11.8m.
Myanmar had the second costliest shutdown, lasting 20,376 at a cost of $1.58bn. Sudan was the third, with 12,707 hours of shutdown, costing $1.12bn. Venezuela was fourth with $1.12bn, Bangladesh was fifth with $796.6m, and India sixth with $322.9m.
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"IT minister draws MNA’s ire with ‘all OK’ mantra"
https://www.dawn.com/news/1882781/it-minister-draws-mnas-ire-with-all-ok-mantra
The meeting of the National Assembly Standing Committee on IT and Telecom witnessed a heated debate over the throttling of internet, leading to an emotionally charged response by the minister of state for IT and the PTA chairman.
The minister, Shaza Fatima Khawaja, told the committee that the IT or any other industry has not reported any issues related to the internet.
The minister’s response angered PPP MNA Sharmila Farooqi, who expressed disappointment over the officials’ attitude.
“Four meetings [of the committee] have been held, and yet no solution has been found. Either we are lying or the government is,” Ms Farooqi said.
While addressing the minister, Ms Farooqi said her comment that the industry faced no losses due to internet disruption was contrary to the facts.
“My husband runs an e-commerce company; he has suffered losses due to repeated internet slowdowns,” Ms Farooqi claimed.
“Is everyone lying about internet speed? The fact is whenever the PTI gives a protest call, we all face internet shutdown immediately,” she said.
“Are we fools who come to the committee meeting only to hear that everything is going well,” she said while referring to the government’s responses to prevalent internet issues.
The committee chairman, MNA Syed Aminul Haque, also expressed concern over the internet slowdown.
He said that in an earlier meeting, the committee was told by the Pakistan Telecommunication Authority (PTA) that the speed would improve by October 2024.
“But the concerns persist regarding internet issues, which are causing the financial losses amounting to millions of dollars to the country,” Mr Haque added.
Arif Habib Limited
@ArifHabibLtd
The KSE100 index has posted a solid growth of 84%, adding 52,676 points during CY24
The main sectors driving this growth were Banks, contributing 13,847 points, followed by Fertilizers with 11,169 points and E&P chipping in 10,012 points. These sectors have contributed 35,028 points to the index making 66% total contribution.
In terms of individual companies, FFC contributed the most with 6,086 points, MARI has added 3,977 points, UBL has added 3,957 points, and OGDC accounted for 2,613 points.
https://x.com/ArifHabibLtd/status/1875417038639837225
The programme, titled "Pakistan Country Partnership Framework 2025-35", aims to improve social indicators in the most neglected but important areas
https://www.thehindu.com/news/international/world-bank-to-approve-20-billion-lending-package-for-pakistan-report/article69065590.ece
The World Bank is set to approve a $20 billion indicative lending package for Pakistan – a pioneering 10-year initiative to protect its funded projects from political transitions and focus on six targeted areas, according to a media report.
The programme, titled "Pakistan Country Partnership Framework 2025-35", aims to improve social indicators in the most neglected but important areas, The Express Tribune newspaper reported, citing official documents.
It will focus on reducing child stunting, combating learning poverty, enhancing climate resilience, decarbonising the environment, expanding fiscal space, and boosting private investment to improve productivity.
These areas have broad support across the political spectrum and are expected to remain unaffected by government changes during the 2025-2035 period, which is anticipated to include at least three general elections.
This 'Country Partnership Framework' is scheduled to be approved by the World Bank board on January 14, following which the global lender's Vice President for South Asia Martin Raiser is also expected to visit Islamabad.
According to the World Bank's assessment, the planning framework "will help shield the programme from the country's volatile polity and frequent swings in priorities and requests that follow government changes." The requests arising from government changes have caused 'fragmentation of the World Bank portfolio and diluted impacts,' it said.
A key Pakistani official, who was part of the framework development, said that the World Bank picked Pakistan as the first country where it would introduce the 10-year partnership strategy.
"The World Bank's total indicative lending envelope for fiscal year 2025 to 2035 will total around USD 20 billion," reads a draft of the framework.
Out of the $20 billion, the World Bank's concessional arm, the International Development Association (IDA), will lend $14 billion and the remaining USD 6 billion is projected to be provided through the relatively expensive window - the International Bank for Reconstruction and Development (IBRD).
"However, these indicative loans will depend upon the evolution of the IDA funding over the years, Pakistan's standing and performance, including with respect to the Sustainable Development Finance Policy and its debt vulnerability indicators," reads the document.
In addition to the USD 20 billion loans to the government of Pakistan, the new framework also aims to support another USD 20 billion private lending by the World Bank's two other arms - the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). This brings the total package to USD 40 billion but the official loans will be equal to USD 20 billion, according to the newspaper.
The new lending will focus on six areas that "currently enjoy strong support across the Pakistani political spectrum", according to the documents. However, it will phase out lending from 10 less-impactful sectors, such as transport, power transmission, telecoms, tertiary healthcare and higher education.
The World Bank's concessional and expensive lending will be meant for "larger projects on average, more frequent scale-ups and expansions, and less pilots and one-off operations", according to the planning document.
The Washington-based Bank's new strategy marks a shift from "short-term macro-fiscal adjustment programmes and often small investments scattered in a wide array of sectors, to more selective, stable and larger investments in areas that are critical for sustained development and growth".
Economy improving, inflation to drop further: SBP chief
The governor attributed the positive trends to an increase in exports and remittances.
https://tribune.com.pk/story/2521065/pakistans-economy-improving-inflation-to-drop-further-sbp-chief
State Bank of Pakistan (SBP) Governor Jameel Ahmed stated on Thursday that the country is on track to meet its economic targets, with its debt levels and balance of payments remaining under control.
Speaking at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ahmad said that inflation is expected to decline further in January, while interest rates will also decrease due to improvements in debt repayment
The governor attributed the positive trends to an increase in exports and remittances, which have contributed to a better current account balance. He emphasized the need to further boost exports, as this will lead to improvements in the current account and balance of payments.
Ahmad also highlighted the country's debt repayment progress, noting that the total debt has remained stable at around $100 billion. He added that the country has made a payment of $2 billion towards its Eurobond obligations and has successfully converted short-term debts into long-term ones.
Meanwhile, FPCCI President, Atif Ikram Sheikh, urged the State Bank to reduce interest rates to single digits to support economic growth. He noted that inflation has decreased to 4.1% in December 2024 and that the justification for double-digit interest rates no longer exists.
Other speakers at the event emphasised the importance of export-led growth, stating that it is the only viable and sustainable path for the country's economy.
They also called for easier and cheaper access to finance for trade, industry, and small and medium-sized enterprises
"After a decade, govt wakes up to market Gwadar port"
https://www.dawn.com/news/1883968/after-a-decade-govt-wakes-up-to-market-gwadar-port
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The commercialisation of Gwadar Port, built more than a decade ago, remains a non-starter, turning the multi-billion-dollar infrastructure facility into a white elephant instead of becoming a transhipment hub.
This was the gist of a high-level meeting on the operationalisation of Gwadar Port called on the directives of the prime minister and presided over by Planning and Development Minister Ahsan Iqbal, who blamed high-ups of the Ministry of Maritime Affairs (MoMA) and National Logistics Cell (NLC) for lack of marketing and non-professional handling of ‘crown jewel’ of $50bn China-Pakistan Economic Corridor.
Highly informed sources said all the stakeholders, including the government, were at unease over the fact that Gwadar had not kept pace with similar other facilities in the region and thus did not offer promised business and employment opportunities to the locals in the absence of trade activities. This, coupled with poor civic facilities like water and electricity shortages, they believed, was being exploited by external factors, leading to repeated unrest and protests.
Therefore, Prime Minister Shehbaz Sharif, in a recent meeting, ordered the routing of 60pc of all public sector cargoes through Gwadar to at least trigger port activities and directed the planning minister to look into the matter and report back as to why the port has not picked up and suggest corrective measures.
At the outset, the minister noted with concern the absence of Balochistan government representation while the operationalisation of Gwadar was under discussions. “Unfortunately, nothing has been done for marketing of transshipment cargos”, the minister was quoted as telling the participants adding the relevant authorities had failed to tell reach out to shipment companies and traders abroad to explain how shipments from China through Gwadar could be cheaper than traditional routes.
This comparative analysis for competitive marketing should have been in full swing two years ago to generate trade and shipment activities and provide employment opportunities to the local people. “Without port activities and business opportunies, (Gwadar) port has been turned into a while elephant”, he said.
He deplored that CARs were ready to transport their cargos through Gwadar but “we have not been able to prepare a business strategy for commercialisation”, adding that the friendly governments and relevant shipping stakeholders in CARs should have been pursued through attractive marketing. “We should learn from neighbouring countries who build product reputations abroad and garner consumer attention even before the products are rolled out”, he said.
The minister directed the relevant authorities to hire an international consultant which could workout cost benefit analysis of shipments through Gwadar in comparison with other ports in the region, could explain how shorter could be this route along with shipment duration and costs etc to attract business through Pakistani missions abroad. He told all the participants that whatever they say in the meeting would be reported to the prime minister for implementation.
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Pitching Gwadar as part of some kind of "cheaper" overland route to transport cargo to and from China was perhaps nonsensical since China's industries are concentrated on its east coast and its arid west being under-developed. Aside from the distance and fuel costs involved in transporting goods over the said overland route, the treacherous geography in GB and security challenges in Balochistan would have only made it look even less attractive.
On a related note, India's first deepwater container transshipment port was recently built and operationalized at Vizhinjam in my state (Kerala).
https://en.m.wikipedia.org/wiki/Vizhinjam_International_Seaport_Thiruvananthapuram
Vineeth: "After a decade, govt wakes up to market Gwadar port"
It takes time to utilize a brand new port in a remote part of the county.
Gwadar will require significant connectivity infrastructure such as roads, railways, warehouses, piperlines etc to make it really useful.
It also requires building the city of Gwadar itself.
In a few decades, I see it becoming a thriving port city like Karachi.
https://www.riazhaq.com/2017/10/will-gwadar-grow-to-become-major.html
BTW, a new container port terminal built in Karachi recently has ramped up very quickly. Why? Because all the other infrastructure is there already.
https://www.riazhaq.com/2019/10/karachis-new-port-terminal-wins.html
Please read this post I wrote back in 2021:
https://www.riazhaq.com/2021/10/is-cpec-development-focus-shifting-from.html
That's just the point. Unlike Karachi port (or the new Vizhinjam port in India), Gwadar is too remote and there are no industries in its vicinity to utilize the port. A city cannot be built out of empty desert land or fishing hamlet if there isn't an economy (industries of some kind) to support it. Else it would turn into a ghost city with empty buildings. Secondly, the hopes of Pakistani authorities for Gwadar turning into a node for overland freight shipments from China was always unrealistic due to issues I mentioned earlier. Unlike what the Planning Minister says in the report I posted above, its not a failure in marketing the port to shipment companies and traders, but that it just happens to be a lot more easier and cheaper for China to sent its freight through ports on its east coast than on a long overland route across its arid western provinces, mountains of Karakoram, and then across KP and Balochistan. Similarly, any plans to utilize Gwadar for energy shipments from Central Asia would have to contend with the Afghanistan factor, and the security challenges in Balochistan itself. Gwadar might be of strategic use to China as a port for its naval ships in the Arabian sea, but other than that there is little economic rationale for it presently. (And as for that strategic use, Pakistani authorities would have to keep in mind that US may not exactly be happy with the country allowing Chinese naval ships to use Gwadar.)
As I understand, Pakistani economy is currently under the phase of "stabilization", and this isn't the first time the country's economy has been saved from the brink of default and "stabilized" under an IMF program due to its strict diktats on govt expenditure, fiscal deficit targets, interest rates etc. As a result, this "stabilization" has come at the cost of economic growth. The real challenge would be to move on from this state of "stability" to that of sustainable economic growth - 'sustainable' being the operative word here - rather than recurring "boom-bust" cycles.
https://www.dawn.com/news/1884417/fragile-recovery
"There are signs that the country’s economy has stabilised after nearly three years of a full-blown crisis. Indeed, the role of the SBP in pulling off this stability cannot be overstated. Headline inflation is down to just 4.1pc and is expected to fall further to around 3pc this month, the rupee-dollar exchange rate remains stable, the haemorrhage of foreign exchange has been stemmed, the country’s international reserves have grown from $3bn to over $11bn despite debt payments, and the current account is running a surplus on soaring remittances and somewhat improved exports. The interest rates are coming down and private credit is said to be picking up pace. Today, the economic environment is a lot less volatile and uncertain than it was even a few months ago."
"These are all positive developments and must be appreciated. That said, the recovery remains fragile and dependent on bilateral debt rollbacks and IMF crutches. The drying official and private capital inflows offer little reassurance about the future. The economy still remains trapped in a low-growth equilibrium despite improving macro indicators. Many believe that growth will remain elusive for some years, at least as the economy is yet to recover the kind of strength it needs to support faster expansion without hitting yet another, deeper crisis. The government is slow in implementing structural reforms and the price of this inaction is being borne by citizens and organised businesses."
"A lot of hope is attached to the promised investments from the Gulf nations, which the ruling party policymakers expect could offer them space to pursue faster growth. Until that happens, they can try selling ambitions like Uraan Pakistan."
And further reading on "Uraan Pakistan":
https://www.dawn.com/news/1882574/trying-too-hard
Vineeth: "That's just the point. Unlike Karachi port (or the new Vizhinjam port in India), Gwadar is too remote and there are no industries in its vicinity to utilize the port"
The whole idea of inclusive development is to help develop the least developed areas of Pakistan. And I believe Pakistan is succeeding in this.
According to the Inclusive Development Index (IDI), Pakistan generally ranks higher than India, meaning Pakistan is considered to be performing better in terms of inclusive development compared to India; in recent reports, Pakistan has been ranked around 47th while India is ranked around 62nd out of emerging economies, with India lagging behind its South Asian neighbors including Pakistan, Sri Lanka, and Nepal.
https://www.riazhaq.com/2018/01/cpec-is-transforming-least-developed.html
If "inclusive development" is all that Pakistan aimed to do at Gwadar with this project, there were clearly far better ways to go about it than build a port or an airport in the middle of nowhere. If a project that you have invested millions into is sitting empty or idle and is turning into a 'white elephant' - and remember, it's not me who is calling it a 'white elephant', but the Pakistani authorities themselves who previously sought to hype it as a 'game changer' - it clearly indicates bad planning and ineptitude at best or monumental corruption at worst. In the case of Gwadar port, I think it is the former. Those who envisioned the project clearly didn't think it through.
For one, Chinese weren't going to send lines of container trucks from their industrial heartland in the east coast all the way to Gwadar to ship them to Europe or the Middle East. Or the other way round. Notwithstanding any imaginary concerns about the Straits of Malacca becoming closed to Chinese shipping, it is clearly far more economical for them to do shipping from their vast array of gigantic ports on the east coast itself.
Secondly, China did not relocate its industries to Gwadar. At least, not anywhere near the scale that Pakistani authorities imagined or hoped for. And with high levels of unemployment becoming a concern for the Chinese authorities now, I think there is less chance of that happening any time soon.
And thirdly, like I said before, one cannot build a port in a remote, desolate place and then expect a bustling city and industries to organically develop around it. If that development model were to work, it already should have and Pakistani authorities wouldn't be calling it a 'white elephant'.
That said, there are plenty of such examples of Indian infrastructural projects having failed to meet expectations or turned into 'white elephants' too. So, I wouldn't say such failures are anything specific to Pakistan.
Here is a story from my own state about how Vallarpadam Container Transhipment Terminal at Kochi having 'failed' (not to be confused with the new Vizhinjam Container Transhipment port which is located further south near state capital Thiruvananthapuram). And this is despite Kochi being the bustling financial capital of the state with good infrastructure and many industries.
"How India’s first container hub terminal failed"
https://www.fortuneindia.com/enterprise/how-indias-first-container-hub-terminal-failed/105292
Pakistan’s remittance inflow at $3.1bn in December 2024, up 6% month-on-month - Pakistan - Business Recorder
https://www.brecorder.com/news/40342066
Remittances increased 33% year over year to $17.8 billion in 1HFY25, compared to $13.4 billion in 1HFY24. Home remittances play a significant role in supporting the country's external account, stimulating Pakistan's economic activity as well as supplementing the disposable incomes of remittance-dependent households.
A reality check from today's DAWN editorial.
"Increased inflows"
https://www.dawn.com/news/1884673/increased-inflows
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REMITTANCES sent home by migrant Pakistani workers have been a saving grace for the country’s faltering economy for the last two decades. With export revenues growing at a painfully slow pace — and often stagnating for years in between — and foreign capital and investment inflows drying, successive governments have relied on remittances to push import-based consumption to boost growth. Thus, even a tiny increase in cash sent home by overseas Pakistanis can always be a moment for celebration. The ongoing fiscal year has proved to be exceptional for remittances, with inflows soaring by a third to a record level of $17.8bn in the first half of the year to December from $13.4bn a year ago. This lends hope that the country will be able to meet the targeted inflows of $35bn in remittances, far surpassing export earnings, this year. No wonder the prime minister has used this occasion to “congratulate’ the nation and boast of his government’s success in stabilising the economy while underlining the commitment of overseas Pakistanis to their country’s development.
The increase in remittances is indeed a positive development for the economy as these have been driving the current account surplus for the last several months, contributing significantly to exchange rate stability and improvement in the State Bank’s forex reserves in the absence of foreign direct investment, as well as any meaningful bilateral and multilateral inflows. But it is not a wise policy to rely on them for external account stability. Remittances have their downsides as well. Studies have shown that higher remittances boost consumption and imports, lead to decline in domestic manufacturing and exports, and make economies of recipient nations more vulnerable to global and regional economic crises. No matter how favourable an impact these have on economic growth, remittances cannot be a substitute for exports and foreign private investment, which increase domestic productivity and generate jobs. Moreover, the quantum of remittances a country receives can never be predicted. Remittances represent hard-earned money by migrant Pakistanis that must be channeled into productive use for the country’s social and economic development instead of squandering on imported luxuries. At the same time, the government needs to devise a strategy to increase industrial and agricultural productivity to boost exports and reduce reliance on uncertain remittances.
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Being the native of an Indian state with few industries and employment opportunities and which survive on remittances from its legions of workers in the Middle East and elsewhere, I can relate. Remittances are a poor substitute for industrial development and employment generation at home.
"Gwadar’s potential"
https://www.dawn.com/news/1884672/gwadars-potential
THE Gwadar deep-sea port, completed in 2007, was supposed to be a shining success for the other newly built ports in the region and beyond. Yet eight years after the official launch of port operations — an event marked by the first-ever container ship with cargo from China passing through it — it lags behind even other China-built ports in Sri Lanka, Nigeria and Cameroon. Barely any vessel calls at Gwadar. Given the situation, it is not surprising that the planning and special initiatives minister is vexed over the failure of relevant authorities to “market the Gwadar port to expedite its commercialisation”. Built as part of the multibillion-dollar CPEC transport and energy infrastructure project, the port remains a non-starter and, in the words of the minister, a “white elephant instead of becoming a regional transhipment hub”. During a meeting the other day, he blamed the maritime ministry and the NLC for their unprofessional handling of what would be the ‘crown jewel’ of the corridor initiative.
There’s a reason the government is concerned over the fact that the Gwadar port has not kept pace with similar facilities in the region. Robust trade through Gwadar is crucial to develop the region and alleviate rampant poverty in Balochistan. Hence, Prime Minister Shehbaz Sharif has recently ordered to route 60pc of all public sector cargoes through Gwadar to “trigger port activities’. That is unlikely to happen anytime soon due to capacity constraints and much higher cost of transportation from Gwadar to the rest of the country compared with Karachi. On his part, the planning minister has directed the relevant authorities to hire an international consultant to prepare a plan to compete with other regional ports in attracting business for Gwadar. But a market plan, no matter how grand, cannot improve the security situation in Balochistan or bring peace to Afghanistan, without which it is impossible to get business from Central Asia. Nor can it convince China to relocate its industry here for export westward, or start importing oil through Gwadar. Moreover, it won’t help address the capacity and power supply issues that constrain trade through the port. Unless the issues containing the potential of Gwadar are addressed, no executive order or marketing plan can make the port city a regional shipping and trade hub.
Beijing and Islamabad have pledged to deepen their bilateral ties, renewing a commitment for the second phase of the strategic China-Pakistan Economic Corridor.
https://www.dw.com/en/china-pakistan-agree-to-upgrade-cpec-cooperation/a-71276419
China and Pakistan have reaffirmed their vow toward the development of the second phase of China-Pakistan Economic Corridor (CPEC), the two nations said on Saturday.
The remarks came after Chinese Vice Foreign Minister Sun Weidong and Pakistan's Foreign Secretary Amna Baloch met in Beijing on Friday for the fourth cycle of diplomatic talks at the vice-foreign ministerial level.
"The two sides agreed that China and Pakistan are ironclad friends and all-weather strategic cooperative partners, and the time-tested friendship between the two countries has grown even stronger," China's Ministry of Foreign Affairs said in a statement on Saturday.
CPEC 2.0
Both foreign officials also co-chaired the fifth meeting of the CPEC Joint Working Group on International Cooperation and Coordination (JWG-ICC) on Friday.
Beijing said that the two countries agreed on the need to "upgrade" the CPEC.
The agreement — which was signed in 2015 — pledges billions of dollars of Chinese investment in Pakistan's infrastructure.
The project is part of China's mammoth Belt and Road Initiative (BRI) which is aimed at developing trade routes to connect with the rest of the world.
Islamabad said on Friday that a "high quality development" of CPEC 2.0 would focus on industrialization, Special Economic Zones (SEZ's), clean energy, agriculture and livelihood projects.
A statement from the Pakistani Ministry of Foreign Affairs posted on social media said "both sides reiterated firm resolve to elevate Pakistan-China ironclad ties to a new pedestal of cooperation and collaboration."
Pakistan's economic hurdles
Chinese investment in the region is facing the challenges posed by political instability, economic stagnation and energy supply issues.
Earlier this week, hundreds of Pakistani protesters blocked a section of a key highway that forms part of the CPEC in protest against power outages.
Locals in the snowy Gilgit-Baltistan region suffered blackouts of more than 20 hours amid temperatures of -15 degrees Celsius (5 degrees Fahrenheit).
The demonstrations on the Karakoram Highway in Hunza Valley prevented dozens of freight trucks from crossing into China.
Pakistan is hoping the greater Chinese investment to help alleviate its economic woes.
Reports of these talks, MoUs, agreements and declarations to invest in Pakistan come dime a dozen, but how much of these would translate into real investments remains the moot question. In case you happened to miss it, there was another news report about Pakistan's Commerce Minister travelling to Seoul and having talks with his South Korean counterpart. Again we hear grand declarations about South Korea relocating its industries to Pakistan, waxing eloquent about Pakistan's 'strategic location', 'vast market of 250 million', proximity to 'high growth regions' and how Korean industries can use Pakistan as the base to target markets in East Africa and Central Asia etc. But this is just what we have been hearing for more than a decade with China and CPEC as well, so it remains to be seen how much of these grand visions, government-level talks and declarations would materialize into real investments by private South Korean firms.
As the saying goes, the proof is in the pudding.
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"Talks begin for economic partnership with South Korea"
https://www.dawn.com/news/1884230/talks-begin-for-economic-partnership-with-south-korea
South Korea’s Trade Minister Inkyo Cheong has outlined an ambitious plan to relocate Korea’s industrial base from its Northeast Asian neighbours to Pakistan following the signing of the Economic Partnership Agreement (EPA) between the two countries.
At the ceremony, Mr Cheong highlighted the potential of targetting new markets in East Africa and Central Asia by using Pakistan as a strategic manufacturing hub. Additionally, he expressed a strong desire to bring a business delegation to Pakistan to explore investment opportunities and strengthen ties between the private sectors of both nations.
“With Pakistan’s cost-effective labour, liberal investment policies, and proximity to high-growth regions, we see immense potential to develop a dynamic partnership that benefits both sides,” Mr Cheong stated.
The Korean minister reiterated his commitment to advancing the negotiations in the shortest possible timeframe. “The EPA represents not just a trade agreement but a transformative partnership that will elevate Korea-Pakistan ties to unprecedented levels,” he said.
He emphasised Pakistan’s strategic importance, stating that Pakistan’s geographical location and its vast market of 250 million people make it a critical partner for Korea’s economic growth plans.
Mr Cheong also announced his intention to personally lead the first round of negotiations, which will be hosted in Pakistan. He invited Pakistan’s Commerce Minister Jam Kamal to co-chair the discussions, signalling Korea’s commitment to fostering a high-level partnership.
Both sides expressed their determination to conclude the negotiations expeditiously. The Terms of Reference (TOR) provide a comprehensive framework for addressing key issues such as trade liberalisation, investment, digital trade, intellectual property rights, and climate resilience.
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"Institutional debacle"
https://www.dawn.com/news/1884875
Governance quality and perceptions of the political, economic, and policy climate are critical in shaping overall conditions for investment and growth. Given the mobility of international capital, strong institutions play a major role in attracting and retaining investment inflows.
Pakistan’s declining growth and investment trends are largely attributable to the continuous decline of its institutions. This is reflected in poor governance assessments in the World Bank’s ‘Worldwide Governance Indicators’. When benchmarked against regional counterparts, Pakistan’s performance is subpar. For instance, in ‘government effectiveness’, India’s percentile rank was 67.9, while Pakistan lagged at 30.6 in 2023. In ‘political stability and absence of violence/terrorism’, Pakistan’s rank was a mere 6.6. Similarly, in ‘regulatory quality’, Pakistan’s score of 19.8 was well below India’s 47.2.
Governance in Pakistan’s public institutions has reached a critical point. The political leadership remains oblivious to the fact that their actions, motivated by political ambitions and vested interests, are eroding key state institutions — parliament, judiciary, and executive. Consequently, Pakistan is trapped in a low-growth, low-investment cycle, facing insurmountable development challenges. To illustrate, the economy grew by just 0.98pc in the first quarter, well below the projected 3pc for this year.
The current self-styled democratic government, often called a ‘hybrid regime’, continues to undermine civilian institutions. Parliament, a key state organ, is in a precarious position.
The establishment’s interference in political affairs is an old issue, but it has recently taken active charge of the country’s economic management, formalised by the creation of the Special Investment Facilitation Council (SIFC) in June 2023. Initially premised on creating a one-stop facility to attract foreign investment from Gulf countries, the SIFC has virtually become a supra-cabinet, with the military leadership now overseeing economic matters.
The army chief’s meetings with businessmen to discuss economic issues, coupled with assurances of $100 billion in foreign investment, illustrate the SIFC’s growing influence. Coordinated by a military officer and granted the status of a division, the SIFC has created a parallel structure within the government.
Investment is not secured through government MoUs or by mantras. It is the private sector that creates opportunities and negotiates with foreign investors. Investment depends on political and economic stability, policy consistency, investment security, and global competitiveness of businesses. Despite the SIFC’s efforts, investment fell to a record low of 13pc of GDP in FY24, below the long-term average of around 15pc. Pakistan attracted just $1.9 billion in FDI, a mere $275 million increase from FY23, and below the $1.936bn in FY22.
Arif Habib Limited
@ArifHabibLtd
Current Account Surplus reached USD 1.2bn during 1HFY25
Current Account surplus of USD 582mn for the month of Dec’24 compared to a surplus of USD 684mn during Nov’24.
During 1HFY25, the country’s posted current account surplus of 1,210mn as compared to a deficit of USD 1,397mn during the same period last year.
https://x.com/ArifHabibLtd/status/1880122323883155621
Arif Habib Limited
@ArifHabibLtd
Pakistan Technology - Highest-ever IT exports recorded in Dec’24 (USD 348mn).
https://x.com/ArifHabibLtd/status/1880207335236481372
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https://tribune.com.pk/story/2522840/it-exports-hit-record-348m-in-dec24
Pakistan achieved record monthly IT exports of $348 million in December 2024, marking a 15% year-on-year (YoY) increase and a 12% rise month-on-month. These exports also surpassed the 12-month average of $299 million. December 2024 marked the 15th consecutive month of YoY IT export growth, starting from October 2023. Cumulatively, the first half of FY2024-25 (1HFY25) IT exports reached $1.86 billion, up by 28% YoY.
According to Nasheed Malik, an official of Topline Research, the YoY jump in IT exports can be attributed to several factors, including the global expansion of Pakistani IT companies' client base, particularly in the GCC region. Other key contributors include the relaxation of the permissible retention limit by the State Bank of Pakistan (SBP) - increasing it from 35% to 50% in Exporters' Specialised Foreign Currency Accounts - as well as the introduction of equity investment abroad through these foreign currency accounts and the stabilisation of the local currency, which encouraged exporters to repatriate a larger share of their profits.
Workforce exports drive economy
Experts are divided as 2024 sees brain drain of 727,381 but remittances hit $34.6b
https://tribune.com.pk/story/2522190/workforce-exports-drive-economy
LAHORE:
Pakistan's export of manpower to various regions across the globe has become an important aspect of its economic landscape. With millions of Pakistanis working abroad, their contributions via remittances have emerged as a lifeline for the country's economy, especially in times of economic turbulence. However, the accompanying brain drain raises complex questions about the nation's future development.
In 2024, 727,381 Pakistanis left the country seeking better opportunities abroad. According to the Bureau of Emigration and Overseas Employment, this figure is nearly 15% lower than the 2023 total of 862,625.
A significant number of these workers ventured to the Middle East, particularly to Saudi Arabia and the United Arab Emirates (UAE), where sectors like construction, healthcare, and IT absorbed Pakistani talent.
These workers sent home $34.634 billion in remittances during the calendar year 2024, according to the State Bank of Pakistan (SBP), accounting for a substantial portion of the country's foreign reserves. This marks a 31.36% increase from the $26.37 billion received in 2023, reflecting the resilience of expatriate workers amid global economic challenges.
"Remittances are the backbone of our economy. They help the country pay its foreign bills at a time when foreign direct investment and exports are under pressure," said economist Osama Siddiqi. These inflows act as a safety net during economic downturns, ensuring that families dependent on these funds are able to afford basic necessities. Moreover, they support consumption-driven growth, which remains a critical component of Pakistan's economy. "The consistent flow of remittances has shielded Pakistan from severe balance-of-payment crises in the past. Without them, the economic strain would have been much worse," he added.
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"Indian brain drain is huge, but they are proud of that. We just had an Indian prime minister in the United Kingdom, US presidents now have Indian advisors, and the IT sector and other think tanks are also dominated by Indians. This all is due to brain drain. Though Pakistan needs to upskill its workforce to reach that point, we have to do this for the stable future of our country. Leaving home is never easy; it is a tough journey of dreams and opportunities. Our challenge should be to harness these dreams for the collective good of our nation," Sikander added.
Pakistani exporters secure $3 Billion orders at Heimtextil
https://profit.pakistantoday.com.pk/2025/01/24/pakistani-exporters-secure-3-billion-orders-at-heimtextil/
Faisalabad textile sector’s operations tied to key international orders; SMEs urged for incentives to drive export growth
Pakistani exporters clinched $3 billion in export orders at Heimtextil, the world’s largest textile trade fair held in Frankfurt, Germany, according to Imran Mehmood, Central Chairman of the All Pakistan Bed-sheets & Upholstery Manufacturers Association (APBUMA).
Mehmood hailed the achievement as a vital boost to Pakistan’s textile sector, emphasizing that Faisalabad’s year-long textile operations depend heavily on orders secured during this event. He also highlighted the government’s ambitious plan to increase exports from $30 billion to $100 billion over the next five years, while urging for immediate measures to support the sector.
Stressing the critical role of Small and Medium Enterprises (SMEs) as the “growth engine” of the economy, he called for low-interest loans to counter rising input costs, including electricity, gas, and yarn. Additionally, he suggested assigning the State Bank of Pakistan and APBUMA to oversee loan disbursements, ensuring effective utilization to maximize output and employment in the textile sector.
Pakistan central bank cuts key rate to 12% amid easing inflation | Reuters
https://www.reuters.com/markets/rates-bonds/pakistan-central-bank-cuts-key-rate-by-100-bps-2025-01-27/
Pakistan central bank cuts key rate by 100 bps to 12%
Inflation forecast to ease, core inflation stays high
Maintains full-year GDP growth forecast at 2.5%-3.5%
Outlook for current account balance has improved
IMF to conduct first review of $7 bln loan in March
KARACHI, Pakistan, Jan 27 (Reuters) - Pakistan's central bank cut its benchmark interest rate by 100 basis points to 12% on Monday, in line with expectations, as inflation eases and growth looks to set to pick up after 1,000 basis points of rate cuts over the last six months.
The State Bank of Pakistan has slashed rates from an all-time high of 22% last June, one of the most aggressive moves among central banks in emerging markets and exceeding its 625 bps of rate cuts in 2020 during the COVID-19 pandemic.
The bank's governor Jameel Ahmad said at a press conference that the inflation rate would ease further in January but noted core inflation remained elevated. He forecast full-year inflation in the year to June would average 5.5%-7.5%.
"Considering these developments and evolving risks, the Committee viewed that a cautious monetary policy stance is needed to ensure price stability," the bank's monetary policy committee said in a statement accompanying the decision.
"The real policy rate needs to remain adequately positive on a forward-looking basis to stabilize inflation in the target range of 5 – 7 percent," it added.
Fourteen of 15 analysts surveyed by Reuters expected the central bank to cut its key rate by at least 100 bps mainly due to weaker inflation.
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The bank maintained its forecast of full-year GDP growth at 2.5%-3.5% and predicted faster growth would help boost the country's previously struggling foreign exchange reserves.
"The improved current account outlook, along with the expected realization of planned financial inflows, is likely to increase the SBP's FX reserves beyond $13 billion by June 2025," the bank's statement said.
Pakistan posted a current account surplus of $0.6 billion in December, bringing the cumulative surplus to $1.2 billion for the first half of the current fiscal year, the bank said, adding the outlook for the current account balance had improved considerably.
Remittances (to Pakistan) expected to surpass $35bn in FY25: analysts
https://www.thenews.com.pk/print/1278605-remittances-expected-to-surpass-35bn-in-fy25-analysts
KARACHI: Pakistan’s remittances are projected to exceed the central bank’s forecast of $35 billion for the fiscal year 2025, thanks to the country’s efforts to curb illegal foreign exchange trade, increasing citizens working abroad, and economic stability bolstered by the International Monetary Fund (IMF) bailout, according to analysts.
In a recent report, an analyst at Topline Securities estimates that remittances will reach $37 billion this fiscal year. He expects the country’s current account balance to breakeven, resulting in a surplus of 0.5 per cent of its gross domestic product (GDP) -- equivalent to approximately $0-2 billion -- primarily driven by higher-than-expected remittance inflows.
During the July-December period of FY25, remittances increased to $17.8 billion, representing a 33 per cent rise compared to the same period last year. The State Bank of Pakistan (SBP) projects total remittance inflows of $35 billion for this fiscal year, up from $30.3 billion in FY24.
Remittances play a vital role in supporting the country’s external account and foreign exchange reserves. Currently, the SBP’s forex reserves amount to $11.37 billion, sufficient to cover over two months’ worth of imports.
According to the SBP’s monetary policy statement, while the import bill has exceeded export earnings, remittance inflows have more than compensated for the widening trade deficit. Given these trends, particularly the strong remittance growth, the outlook for the current account balance has significantly improved. It is now expected to remain within a surplus or deficit of 0.5 per cent of GDP in FY25.
Saad Hanif, head of research at Ismail Iqbal Securities, anticipates that remittances will rise to between $34.8 billion and $35.5 billion in FY25. He noted that the increase in remittances can be attributed to several factors, including the growing number of people travelling abroad for work, the ease of using Roshan Digital Accounts (RDA), improved policy stability under the IMF programme, and a crackdown on illegal transfer channels such as ‘hundi’ and ‘hawala’. In the last two years, over 1.5 million Pakistanis have gone abroad for work, which has boosted remittance inflows. The ease and speed of banking services, particularly with the growth of RDAs and fintech, are encouraging the use of legal channels for remittances.
Tresmark, a financial terminal, stated in a note that surging remittances could be transformative for Pakistan’s economic viability, but certain misconceptions need to be addressed.
One common myth is that everyone in Pakistan is emigrating. However, data shows that emigration patterns from Pakistan align with trends observed in the region, including India and Bangladesh.
Another misconception is that Pakistan is experiencing greater remittance growth than other countries. The report clarifies that, over the past five years, remittance performance in Pakistan has been comparable to that of India and Bangladesh, although the trajectories have differed slightly.
Arif Habib Limited
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CPI at 9.2 years low in Jan'25
•CPI for the month of Jan’25 drops significantly and reaches 2.4% YoY (first after Oct’15) compared to 4.07% YoY in Dec’24.
•This decrease contrasts sharply with Jan’24, which recorded a much higher YoY inflation rate of 28.34%.
•The decline on YoY basis in Jan'25 can be mainly attributable to high base effect and lower food inflation.
https://x.com/ArifHabibLtd/status/1886329688886317279
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Arif Habib Limited
@ArifHabibLtd
Trade deficit increased by 18% YoY to USD 2.3bn during Jan’25
o Exports for the month amounted to USD 2.9bn, reflecting a 5% YoY increase and a 0.3% MoM growth.
o Meanwhile, imports were recorded at USD 5.2 bn, reflecting a 10% YoY increase but a 2.3% MoM decline.
o For the 7MFY25, the trade deficit rose by 2.8% YoY to USD 13.5bn.
https://x.com/ArifHabibLtd/status/1886406149336911986
China, Pakistan pledge to boost cooperation on infrastructure, mining projects | Reuters
https://www.reuters.com/world/asia-pacific/china-pakistan-pledge-boost-cooperation-infrastructure-mining-projects-2025-02-06/
HONG KONG, Feb 6 (Reuters) - China and Pakistan will upgrade and reconstruct Pakistan's railway network and further develop its Gwadar port, while Chinese companies can invest in the South Asian nation's offshore oil and gas developments, the official Xinhua news agency reported on Thursday.
The comments came as Pakistan's President Asif Ali Zardari visits China from February 4-8, where he will also attend the opening ceremony of the Asian Winter Games.
Chinese investment and financial support for Pakistan since 2013 have been a boon for the South Asian nation's struggling economy.
Pakistan and China recognised the importance of Pakistan's "Gwadar Port and agreed to fully unleash its potential as a key node for connectivity and trade," Xinhua said quoting a joint statement from the two countries.
Chinese-funded enterprises would be encouraged to "carry out mining investment cooperation in Pakistan" and cooperate in terrestrial and marine geological resources.
"Pakistan welcomes Chinese companies to participate in the development of offshore oil and gas resources in Pakistan."
Longtime Pakistan ally China has thousands of nationals working on projects grouped under the China-Pakistan Economic Corridor (CPEC).
The $65-billion investment is part of President Xi Jinping's Belt and Road Initiative, designed to Beijing's global reach by road, rail and sea.
Is Imran Khan losing momentum?
https://www.dw.com/en/taking-stock-of-pakistans-government-a-year-after-elections/a-71541070
Economic indicators improving
For years, Pakistan has been dealing with an economic crisis marked by high inflation, a depreciating currency and International Monetary Fund (IMF) bailouts.
However, there is some room for optimism this week after the Pakistan Bureau of Statistics reported year-on-year inflation came in at 2.4% — the lowest in nine years. This marks a significant decline from the 28.3% recorded in January 2024.
"One year after the February 2024 election, Pakistan's economy seems to have stabilized and this has certainly boosted the confidence of the current 'hybrid regime,'" said Rumi.
"Politicians in power have made arrangements to continue the current regime and have removed all the threats, in particular, the independent judges who may have questioned the act of the current hybrid order," he added.
Currently, Pakistan is benefiting from a $7-billion (€6.7-billion) support package from the IMF, which was granted in September, as it works toward economic recovery.
In January, Pakistan agreed to an unprecedented 10-year plan with the World Bank which will see $20 billion (€19.4 billion) worth of loans for the country's cash-strapped economy.
Last week, Pakistan's central bank reduced its benchmark interest rate by 100 basis points to 12%, reflecting the easing of inflation and the anticipated growth following a total of 1,000 basis points in rate cuts over the past six months.
The State Bank of Pakistan has significantly lowered rates from a peak of 22% in June, marking one of the most aggressive actions among central banks in emerging markets, surpassing the 625 basis points cut implemented in 2020 during the COVID-19 pandemic.
In December, Pakistan's consumer inflation rate was recorded at 4.1%, the lowest in over six years, aided by favorable base effects. This figure was below the government's expectations and a notable decrease from the multi-decade high of approximately 40% observed in May 2023.
'Path toward will not be easy'
Analyst Rumi said a stable path forward for Pakistan's democracy would require a "broad base consensus on the next election and how it should be held under a neutral election commission."
"Perhaps this quagmire can best be addressed through an early election, and history tells us that handling the current level of political instability would require an understanding of a free and fair election within the next two years," he said.
On healing political wounds, Kugelman said the "only way forward is dialogue."
"Talks [between government officials and Khan's aides] collapsed in recent days, but at least there was an effort to sit together. This offers something to build on for the future. Even with all the anger and ill will, the two sides have been willing to engage," he added.
Afzal agrees that Pakistan's opposing political parties need to bury the hatchet.
"The current level of political fighting will continue until there is some sort of reconciliation and political space allowed to the opposition — and that would be the right path forward for Pakistan and for its democracy — but the path toward will not be easy."
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Despite continued political protests carried out by PTI supporters, analysts contend that this has not been enough to move the needle, as the PML-N enjoys significant support from Pakistan's powerful military.
"A year after a marred election, the civilian coalition government, in partnership with the military, has consolidated control over the country," Madiha Afzal, a fellow at the Brookings Institution, told DW.
"Of course, it has come at quite a bit of cost — to the country's democracy, to the judiciary's independence, to people's freedom of speech and right to information — and its benefits are in question," she added.
Khan was removed from premiership in 2022 through a no-confidence vote in Pakistan's parliament.
Pakistan Reforms Report 2025 Launched
https://www.kron4.com/business/press-releases/ein-presswire/784314115/pakistan-reforms-report-2025-launched/
Governance & Public Sector Reforms
- 150,000 federal workforce positions eliminated to reduce expenditures.
- 33% female representation mandated on government boards.
Economic & Financial Reforms
- Inflation reduced from 38% in May 2023 to 4.1% by December 2024.
- Foreign exchange reserves increased from $4.4 billion to $11.73 billion by the end of 2024.
- Helped maintain currency stability and prevent extreme fluctuations.
- GDP growth improved from 0.29% to 2.38% in the past year, projected to reach 3.5% in FY25.
- Trade deficit reduced from $27.47 billion to $17.54 billion in 12 months.
- Defined contribution pension reform expected to save Rs. 1.7 trillion over 10 years.
- Rs. 83 billion expected reduction in pension allocations for FY 2025–2026.
- Restored investor confidence; encouraging local and foreign investment.
- Averted a severe economic crisis through strategic intervention, through SIFC.
- Expanded crackdown on illicit trade through targeted illegal activities under the Afghanistan Transit Trade Agreement (ATTA).
- Addressed the influx of untaxed, smuggled goods into Pakistan.
Investment & Industrial Reforms
- 34 Memorandums of Understanding (MoUs) signed with Saudi Arabia, worth $2.8 billion.
- SEZ expansion and industrial policy reforms expected to boost exports and attract FDI.
- Business Facilitation Centers (BFCs) to ease regulatory burdens.
Security & Immigration Reforms
- Visa Prior to Arrival (VPA) facility granted to 120 countries; over 120,000 visas approved in 6 months.
- All madrassas must register within six months (new ones within a year).
- Madrassas are required to submit financial audits annually to ensure transparency.
- Encourages the inclusion of modern education subjects alongside religious studies in madrassas.
- Madrassas can register under either the Societies Act or the Ministry of Education.
- Creation of the National Forensics and Cybercrime Agency (NFCA) to tackle cyber threats.
- 1,600 Special Protection Unit (SPU) personnel deployed to safeguard non-CPEC projects.
- 100 surveillance cameras installed under the Islamabad Safe City Project.
- 973 officers recruited for the new Anti-Riot Force.
Digital Transformation & Cybersecurity
- National Forensics and Cybercrime Agency (NFCA) established.
- The Digital Case Flow Management System implemented in 178 federal courts, tracking 130,000 cases via SMS.
- AI-driven National Registration & Biometric Policy Framework launched.
- Introduced new policies to protect users from data breaches and cyber threats.
- Updates outdated cyber laws to align with global best practices.
- Strengthens laws against false, misleading, and harmful digital content.
- Establishment of Social Media Protection and Regulatory Authority for digital oversight.
- Adjustments made to penalties for fake news while
Arif Habib Limited
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Remittances increased by 25% YoY to $ 3.0bn during Jan’25
Remittances by overseas Pakistani's increased by 25% YoY to USD 3.0bn during Jan'25 compared to USD 2.4bn during Jan’24. On MoM basis, remittances decreased by 3%.
In 7MFY25, remittances increased by 32%YoY to USD 20.8bn.
https://x.com/ArifHabibLtd/status/1888969491092062600
Pakistan, China sign $300mn MoUs in energy, coal, and cement sectors
Agreements include renewable energy projects, cement production, and coal gasification
https://profit.pakistantoday.com.pk/2025/02/06/president-zardari-witnesses-300-million-deals-in-energy-coal-and-cement/
The agreements, signed between Pakistani stakeholders and Chinese investors, aim to enhance the country’s industrial growth and energy sustainability.
The Energy Department of the Government of Sindh and Ming Yang Renewable Energy (International) Company Ltd. signed an MoU to advance renewable energy projects in the province.
Pakistan’s Ambassador to China, Khalil Hashmi, signed on behalf of the Ministry of Energy, while Ming Yang Renewable Energy Chairman Li Jianzhang represented the Chinese side.
The partnership will focus on wind and solar hybrid power generation projects, including a 75 MW facility in the Kotri/Nooriabad Industrial Area and a 350 MW plant in Jhimpir, Thatta.
In the cement sector, Thatta Cement Company Limited and Zhonggang Construction Group signed an MoU outlining plans for a new 5,000 t/d cement production line.
Additionally, the Sindh Government reached an agreement with MESKAY FEMTEE CG&M Pvt. Ltd. for a coal gasification and urea production plant in Pakistan, Gwadar Pro reported on Thursday.
The signing ceremony was attended by key officials, including Sindh Chief Minister Syed Murad Ali Shah, Senator Saleem Mandviwalla, Chief Whip of the Senate, Senior Minister of Sindh Sharjeel Inam Memon, Minister for Energy and Planning Syed Nasir Hussain Shah, Pakistan’s Ambassador to China Khalil Hashmi, along with senior government representatives, business leaders, and industry stakeholders.
Arif Habib Limited
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The auto sales numbers increased to 17K units, up by 65% MoM
Auto sales (Cars, LCVs, Vans, Jeeps & EVs) increased by 65% MoM to 17K units (+61% YoY) during Jan’25 (assuming SAZEW sold 500 units in Dec’24).
During 7MFY25, auto sales clocked in at 78.2K units up by 56% YoY.
https://x.com/ArifHabibLtd/status/1889280038668816746
Global funds turn to Pakistan as 84% stock rally set to extend
https://www.thenews.com.pk/print/1282136-global-funds-turn-to-pakistan-as-84pc-stock-rally-set-to-extend
Some of the world’s top money managers are once again favoring Pakistan’s stocks after the market returns last year were among the best globally, reports Bloomberg.
From BlackRock Inc to Eaton Vance Corp, asset managers are warming up to the South Asian nation’s $50 billion market that handed investors 84 per cent returns in 2024. Attractive valuations and a stabilising economy have improved the outlook for local shares, with Intermarket Securities Ltd. predicting a gain of about 40 per cent for the main KSE-100 index this year.
“You don’t have to stretch your imagination to make an investment case for Pakistan,” said Steven Quattry, New York-based portfolio manager at Morgan Stanley Investment Management Inc. The rally has been supported by strong earnings growth, he said.
Pakistan’s stocks surged last year, helped by improving economic outlook and crucial loan deals with the International Monetary Fund. More recently, the nation’s current account balance has improved, and easing inflation spurred the central bank to cut rates.
The optimism is reflected in foreign fund allocations. The nation’s stocks had a 5.0 per cent weight in BlackRock Frontiers Investment Trust as of December, marking a return for the money manager for the first time since March 2022. Eaton Vance also reentered the market in the June quarter following a brief exit.
Legal & General Investment Management Ltd and Evli Fund Management Co have also raised holdings, according to data compiled by Bloomberg. The level of foreign investor interest at present is comparable to the peak years of 2014-2018, according to Mohammed Sohail, chief executive officer of Topline Securities Ltd.
Political Instability
Still, risks remain. The political environment is fragile, with former Prime Minister Imran Khan wielding power to mobilise nationwide protests from behind bars -- unrest that threatens to derail economic activity.
Economic challenges also persist. The nation fell 6.0 per cent short of its six-month tax collection target -- a key condition for its $7 billion IMF loan -- raising concerns about its ability to win the next tranche of the funding.
A downgrade in the nation’s status to frontier market status by FTSE Russell that took effect in September hurt sentiment, prompting foreigners to turn net sellers in the last three months of 2024.
Despite these headwinds, investors are bullish given the improving external finances. Foreign exchange reserves now cover more than two months of imports, inching closer to the IMF-prescribed levels. That’s an improvement from less than a month’s coverage before the IMF bailout in 2023.
“If Pakistan can manage its current account deficit, which they should be able to, we can see a multi-year rally in the market,” said Ruchir Desai, a fund manager at Asia Frontier Capital Ltd in Hong Kong.
Pakistan’s IT exports surpass $2 billion in first 7 months of FY25 - Profit by Pakistan Today
https://profit.pakistantoday.com.pk/2025/02/18/pakistans-it-exports-surpass-2-billion-in-first-7-months-of-fy25/
IT sector sees a 27% YoY growth, with January exports hitting $313 million, as new policies fuel export confidence
ISLAMABAD: Pakistan’s IT exports have reached US$ 2.18 billion in the first seven months of fiscal year 2024-25, marking a 27% increase year-over-year (YoY) compared to the same period in the previous year, as reported by the State Bank of Pakistan (SBP).
According to Topline Securities, this achievement marks the 16th consecutive month of YoY growth for the IT export sector, beginning from October 2023.
In January 2025, IT exports totaled US$ 313 million, reflecting an 18% increase YoY, although a 10% drop compared to December 2024. However, January’s export figures surpassed the 12-month average of US$ 303 million.
Export proceeds per day in January were recorded at US$ 13.6 million, down from US$ 16.6 million in December 2024.
The year-over-year growth in IT exports can be attributed to several key factors:
– Expansion of IT companies’ client bases, especially within the Gulf Cooperation Council (GCC) region,
– Relaxation of the permissible retention limit by the State Bank of Pakistan, which increased from 35% to 50% in Exporters’ Specialized Foreign Currency Accounts,
– The introduction of equity investment abroad through these accounts,
– Stability in the Pakistani Rupee (PKR), encouraging IT exporters to bring back a higher portion of profits to Pakistan.
Pakistani IT companies have remained proactive in engaging with global clients. Recently, some of the leading companies participated in the Oslo Innovation Week and the Pak-US Tech Investment Conference.
A recent survey by the Pakistan Software Houses Association (P@SHA) found that 62% of IT companies are maintaining specialized foreign currency accounts.
A major shift this fiscal year is the SBP’s introduction of a new category for Equity Investment Abroad (EIA), specifically for export-oriented IT companies. Under this new policy, IT exporters can now invest up to 50% of their export proceeds from specialized foreign currency accounts in foreign entities. This development is expected to further bolster the confidence of IT exporters and encourage the repatriation of proceeds to Pakistan.
Net IT exports (exports minus imports) for January 2025 stood at US$ 281 million, showing a 17% increase YoY and 27% growth compared to the previous month. These numbers are also higher than the 12-month average of US$ 261 million.
Pakistan’s food exports rise to $4.62 billion in seven months - Profit by Pakistan Today
https://profit.pakistantoday.com.pk/2025/02/19/pakistans-food-exports-rise-to-4-62-billion-in-seven-months/
Pakistan’s food exports increased by 8.17 percent to $4.62 billion during the first seven months of the fiscal year 2024-25, up from $4.26 billion in the same period last year, primarily driven by a rise in rice shipments, according to data from the Pakistan Bureau of Statistics (PBS).
This marks the 18th consecutive month of export growth, even as domestic food inflation remains at historically high levels, leading to increased prices for consumers across the country.
Rice exports played a key role in the overall increase, with shipments reaching $2.19 billion during July-January 2025, a 3.73 percent rise from $2.12 billion in the corresponding period last year.
The export volume of basmati rice grew by 22.04 percent to 487,221 tonnes, with its export value rising by 11.98 percent to $511.59 million. Non-basmati rice exports also increased by 1.46 percent in value to $1.68 billion, with export volume up 7.72 percent to 3.15 million tonnes.
New export markets, including Bangladesh, have contributed to the expansion of Pakistan’s rice sector, which remains a key driver of exports to the European Union and the United Kingdom. However, the continued surge in rice exports has impacted domestic availability, pushing basmati rice prices up to Rs400 per kg from Rs150 two years ago.
Sugar exports saw a dramatic increase, rising by 2,188 percent to 757,597 tonnes compared to just 33,101 tonnes in the same period last year. Afghanistan has been the primary destination for these shipments, contributing to the domestic price hike in sugar.
Meat exports also registered a modest increase of 2.6 percent during the first seven months of the fiscal year. The expansion of meat exports has been driven by new market openings, the participation of additional exporters, and the approval of more slaughterhouses. However, domestic meat prices have surged in recent years, with buffalo meat prices doubling from Rs700 per kg to Rs1,400, while chicken prices have hit record highs.
Conversely, exports of vegetables declined by 18.14 percent during July-January 2025, mainly due to a drop in onion, potato, and tomato shipments. Fruit exports also recorded a slight decline of 0.24 percent, while fish and seafood exports showed minimal growth of 1.25 percent.
Nifty, Sensex: India middle-class jitters amid stock market rout
https://www.bbc.com/news/articles/cz7vlezv05no
Two years ago, on his bank adviser's suggestion, Rajesh Kumar pulled out his savings - fixed deposits included - and shifted to mutual funds, stocks and bonds.
With India's stock market booming, Mr Kumar, a Bihar-based engineer, joined millions investing in publicly traded companies. Six years ago, only one in 14 Indian households channelled their savings into the stock market - now, it's one in five.
But the tide has turned.
For six months, India's markets have slid as foreign investors pulled out, valuations remained high, earnings weakened and global capital shifted to China - wiping out $900bn in investor value since their September peak. While the decline began before US President Donald Trump's tariff announcements, they have now become a bigger drag as more details emerge.
India's benchmark Nifty 50 share index, which tracks the country's top 50 publicly traded companies, is on its longest losing streak in 29 years, declining for five straight months. This is a significant slump in one of the world's fastest-growing markets. Stock brokers are reporting that their activity has dropped by a third.
"For more than six months now, my investments have been in the red. This is the worst experience in the last decade that I have been invested in stock market," Mr Kumar says.
Mr Kumar, 55, now keeps little money in the bank, having shifted most of his savings to the stock market. With his son's 1.8 million-rupee ($20,650; £16,150) private medical college fee due in July, he worries about selling investments at a loss to cover it. "Once the market recovers, I'm thinking of moving some money back to the bank," he says.
His anxieties reflect those of millions of middle-class Indians who have poured into the stock market from cities big and small - part of a financial revolution.
The go-to investment route is Systematic Investment Plans (SIPs), where funds collect fixed monthly contributions. The number of Indians investing through SIPs has soared past 100 million, nearly trebling from 34 million five years ago. Many first-time investors, lured by the promise of high returns, enter with limited risk awareness - often influenced by a wave of social media "finfluencers" on platforms like Instagram and YouTube, a mixed bag of experts and amateurs alike.
Pakistan’s economy is back. But so is terrorism.
by Mihir Sharma
https://www.japantimes.co.jp/commentary/2025/03/19/world/pakistans-economy-and-terrorism-are-back/
Its nascent revival may be short-lived if insecurity in the borderlands comes to urban centers
The Pakistani state’s control over its western borderland has never been absolute.
Last week, the horrific hijacking of a train by Baloch separatists showed that what little authority it had is fraying. Four soldiers died retaking the Jaffar Express; 21 of the hundreds of hostages had already been killed by the militants, some of whom may have been in the military as well.
Sparsely populated Balochistan has long resented Islamabad’s rule. But separatist activity has intensified in recent years, particularly after Pakistan invited Chinese companies to develop Gwadar port and exploit local minerals. One such organization, the Baloch Liberation Army, claimed this attack.
Pakistan’s military — which, rather than the civilian government of Prime Minister Shehbaz Sharif, retains control over national security — was quick to blame the Afghan Taliban government in Kabul for allowing the BLA to operate from its soil. Relations between the two countries are at a familiar low.
Certainly, the establishment is no longer gloating that the extremists it supported managed to outlast the U.S. military. The Afghan Taliban’s takeover of Kabul has emboldened its fellow travelers. The Pakistani Taliban killed 558 people in 2024, almost twice as many as in the previous year. Baloch separatists murdered more than 500, up from 116 in 2023.
The resurgence of terrorism in Pakistan’s wild west has complicated Sharif’s already difficult job. He wants to focus on steering the country away from economic crisis, but issues from Afghan relations to Baloch discontent demand his government’s attention. These are problems that need political solutions.
The disconnect between the grim drumbeat of terror attacks on the country’s margins and the positive economic news from its heartland is startling.
Inflation is running at 1.5%, down from almost 40% in just two years. Investors in the Karachi stock market were given a world-beating 84% return last year and expect about 40% this year. The government looks stable enough now that foreign investors have returned to buying its short-term debt. As the soldiers finished their grim task in Balochistan last week, Moody’s was announcing that it had changed its outlook on the banking system from stable to positive.
Much of this is thanks to the civilian government’s work raising revenue and managing public debt. Privatization efforts and new taxes mean that revenue may increase enough for the International Monetary Fund to keep running its $7 billion loan program. And China has promised to roll over its $2 billion loan book as well.
New success stories are emerging out of the country, as well. It’s now one of the largest markets for solar panels in the world; just the amount it bought in 2024 would be enough to raise installed electricity capacity in the country by a third.
But Sharif’s work at staving off crisis, particularly by stabilizing the current account deficit, clearly hasn’t pleased everyone. Economic gains are always at risk if you don’t come to some accommodation with your rivals, political or geopolitical.
Jailed opposition leader Imran Khan, for example, directly targeted the economy when he asked his supporters abroad to stop sending money home. Without workers’ remittances, Pakistan wouldn’t have the foreign exchange it needs for imports, particularly of energy. Fortunately, Khan’s irresponsible gambit failed, with remittances growing 29.3% in 2024. But he has more than enough supporters to paralyze the nation’s streets whenever he gives the order.
The Pakistani Taliban feels similarly to Khan about the return of economic stability and has turned to threatening firms linked to the military. Given the military’s presence in business, you could read that as a threat against the country's entire economic infrastructure.
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