Category: Business

The most important business news, explained in a young, easy to understand way. News that affects young career professionals.

  • Pakistan’s inflation eases with further decline expected in coming months

    Pakistan’s inflation eases with further decline expected in coming months

    Pakistan’s headline inflation is expected to range between 18.5 per cent and 19.5 per cent in April 2024, with further deceleration projected in the coming months.

    The Finance Division’s ‘Monthly Economic Update and Outlook’ attributes the downward trend to a favourable base effect, improved domestic supply chains, and administrative measures.

    In March, headline inflation stood at 20.7 per cent, down from 23.1 per cent in February. Despite this easing, the government faces challenges, such as rising crude oil prices on the international market, leading to increased domestic gasoline prices. To offset this, the government has lowered wheat flour prices and imposed stricter controls.

    The Finance Division notes moderate recovery during the first nine months of the fiscal year, with growth in agriculture, a decrease in inflationary pressures, and stability in external accounts. The large-scale manufacturing (LSM) sector also shows positive signs, thanks to improved agricultural output and export demand.

    However, the report acknowledges challenges in fiscal management due to rising expenditure pressures from higher markup payments. To maintain stability, fiscal consolidation is required.

    The State Bank of Pakistan’s Monetary Policy Committee (MPC) recently kept the key policy rate at 22 per cent, citing ongoing risks to inflation from global oil prices and anticipated budget measures. The MPC’s goal is to bring inflation down to 5-7 per cent by September 2025.

    Pakistan’s broader economic struggles include pressure on external accounts and low foreign exchange reserves.

    The International Monetary Fund’s (IMF) $3-billion Stand-By Arrangement (SBA) has provided some relief, but Pakistan is seeking a longer-term programme with the IMF for economic stability and growth.

  • KIA Stonic EX+ price slashed by Rs1.5 million in Pakistan

    KIA Stonic EX+ price slashed by Rs1.5 million in Pakistan

    Lucky Motor Corporation (LMC) has announced a significant reduction in the price of the KIA Stonic EX+ in Pakistan, a move that comes amid sluggish sales for the popular car model.

    The company, presenting the price cut as a “celebratory limited-time offer,” revealed on Monday that the new price for the Stonic EX+ is Rs4,767,000—a substantial drop of Rs1,513,000 from its previous cost of Rs6,280,000.

    The announcement closely follows the recent price reduction of KIA’s compact SUV, the Sportage, which saw a decrease of up to Rs300,000.

    This sequence of price adjustments indicates a possible market trend towards more affordable pricing in response to consumer demand and purchasing power in Pakistan’s automotive sector.

    LMC’s official statement noted that the price reduction is part of the company’s celebration of five years of CKD (completely knocked down) operations in Pakistan. The company expressed gratitude for customer support and explained that the price revision is intended to mark this milestone.

    “As we complete 5 years of our CKD operations, we are filled with gratitude for your unwavering support and thank you for your help in achieving this significant milestone in Pakistan. To mark this occasion, we are thrilled to introduce a celebratory limited-time price offer on our beloved Kia Stonic,” the statement read.

    However, industry experts suggest that the price drop might be driven by sluggish sales and lower offtake of the vehicle, rather than purely by celebratory reasons.

    The timing of the price revision, coming on the heels of another significant price reduction, raises questions about the broader market dynamics and the company’s strategy to boost sales.

    The new pricing for the KIA Stonic EX+ is set to take effect on April 29, 2024, and customers will likely watch closely to see if this move leads to a resurgence in the vehicle’s popularity in the Pakistani market.

  • SBP holds key policy rate at 22% for seventh consecutive time

    SBP holds key policy rate at 22% for seventh consecutive time

    The State Bank of Pakistan (SBP) announced on Monday that it is maintaining its key policy rate at 22 per cent, marking the seventh consecutive meeting with no changes to the rate.

    The Monetary Policy Committee (MPC), in its meeting, discussed ongoing macroeconomic stabilisation measures.

    The committee noted that these measures have contributed to noticeable improvements in both inflation and the external economic position. This comes against a backdrop of moderate economic recovery.

    The MPC’s statement following the meeting acknowledged that, while inflation has begun to improve, it remains high.

    The committee also mentioned that global commodity prices seem to have stabilised, indicating resilience in global economic growth.

    However, the committee highlighted a number of uncertainties. It pointed out that recent geopolitical events have created additional uncertainty in the global economic outlook.

    Additionally, the upcoming budgetary measures might affect short-term inflation trends.

    Given these factors, the MPC concluded that the current monetary policy stance should be maintained to achieve its inflation target of 5 to 7 per cent by September 2025.

  • Pakistan’s mobile phone imports soar by 181% amid local manufacturing challenges

    Pakistan’s mobile phone imports soar by 181% amid local manufacturing challenges

    Pakistan’s mobile phone imports surged by 181.26 per cent during the first nine months (July-March) of the fiscal year 2023-24, reaching $1.301 billion, according to the Pakistan Bureau of Statistics (PBS). 

    This significant increase is in stark contrast to the $462.700 million recorded during the same period in the previous fiscal year.

    Despite this year-long surge, March 2024 saw a slight decline in mobile phone imports on a month-on-month (MoM) basis, with imports totaling $153.051 million, a 4.87 per cent decrease from February 2024’s $160.90 million.

    However, on a year-on-year (YoY) basis, mobile phone imports experienced a remarkable 930.92 per cent growth in March 2024, as compared to $14.846 million in March 2023.

    The overall telecom imports also reflected similar trends. During the first nine months of the fiscal year, total telecom imports reached $1.623 billion, representing a 117.90 per cent increase from $744.971 million during the same period of the previous fiscal year.

    On a YoY basis, telecom imports rose by 422.58 per cent, totaling $189.042 million in March 2024 compared to $36.175 million in March 2023. However, on a MoM basis, telecom imports saw a slight decline of 1.13 per cent in March 2024, down from $191.201 million in February 2024.

    Meanwhile, local manufacturing and assembling of mobile handsets continued to be an area of focus. During the first two months (January-February) of the calendar year 2024, local plants manufactured or assembled 6.1 million mobile handsets, which included 2.78 million 2G and 3.35 million smartphones. 

    This was in stark contrast to the 0.3 million units that were imported commercially during the same period.

    In February 2024, local plants manufactured or assembled 3.83 million mobile handsets, significantly higher than the 0.06 million units imported commercially. 

    Notably, the Pakistan Telecommunication Authority (PTA) reported that 60 per cent of mobile devices on the Pakistan network are smartphones, while the remaining 40 per cent are 2G.

    Despite robust local manufacturing efforts, official data indicated that local manufacturing and assembling of mobile handsets declined by around four per cent during the calendar year 2023. 

    This decline is attributed to challenges in importing mobile phone accessories due to restrictions on the opening of letters of credit (LCs). 

    Nonetheless, commercial imports of mobile handsets increased during this period, suggesting a shift in strategy to meet the demand for mobile phones in the face of supply chain disruptions.

    The data presents a complex picture of Pakistan’s mobile phone industry, with significant growth in imports and shifts in local manufacturing dynamics. 

    The continued growth in imports highlights the demand for mobile technology, while local manufacturing faces challenges that could shape the future of the telecom sector.

  • Petrol, diesel prices in Pakistan likely to drop as global oil prices decline

    Petrol, diesel prices in Pakistan likely to drop as global oil prices decline

    In a potential relief for Pakistanis grappling with inflation, the government is expected to reduce petrol prices for the first half of May 2024, following a dip in global oil prices.

    According to reports, petrol prices could drop by around Rs3.75 per litre, with a final announcement scheduled for midnight on April 30, 2024.

    This price cut, if implemented, is a response to a recent decline in international petroleum product prices, with a drop of $1.86 to $107.16 per barrel observed.

    High-speed diesel (HSD) prices are also likely to be adjusted, with a reduction of around Rs7.85 per litre anticipated, owing to a $4.3 per barrel decrease in global prices.

    Additionally, the stability of the Pakistani rupee against the US dollar has contributed to the downward trend.

    Since the previous fortnight, the local currency has remained steady at a weighted average rate of approximately Rs278.38 per USD.

    However, these figures are subject to change, as there are still three more trading sessions before the final pricing announcement.

    Fluctuations in the global market and exchange rate movements could impact the final decision.

    In the last pricing update, the government increased petrol prices by Rs4.53 to Rs293.94 per litre, while high-speed diesel saw an increase of Rs8.14 to Rs290.38 per litre.

    The upcoming price adjustments, if confirmed, could provide some relief to consumers affected by inflationary pressures.

  • No plans for fixed tax on solar power, says Power Division

    No plans for fixed tax on solar power, says Power Division

    The Power Division has dismissed recent media reports suggesting that the government is imposing a fixed tax on solar power.

    According to a notification released by the Information Ministry today, these reports are unfounded and inaccurate.

    The Power Division clarified in a statement that there is no substance to the claims about a fixed tax on solar power.

    It highlighted that neither the Central Power Purchasing Agency nor the Power Division has submitted any summary to the government proposing such a measure.

    The statement highlighted that the Net Metering Policy of 2017 was designed to encourage the use of alternative energy sources, contributing to a significant increase in solar energy adoption.

    This rapid solarization is seen as a positive trend, aligning with the government’s objectives to promote clean energy.

    The Power Division also mentioned that any proposed changes or amendments to current policies are aimed at alleviating financial burdens on the economically disadvantaged.

    It stressed that protecting the interests of the 152,000 net metering consumers remains a priority.

  • Major seizure: RTO Rawalpindi destroys 25 million smuggled cigarettes

    Major seizure: RTO Rawalpindi destroys 25 million smuggled cigarettes

    The Regional Tax Office (RTO) Rawalpindi carried out a significant operation on Thursday to destroy a large quantity of illicit, smuggled, counterfeit, and non-duty-paid cigarettes. The estimated value of the destroyed products was approximately Rs194 million.

    The event, held at Chakbeli Road in Rawalpindi, involved the destruction of 2,585 packrites, which equates to 25,580,000 cigarette sticks.

    Chief Commissioner of RTO Rawalpindi, Tehmina Aamer, presided over the ceremony as the Chief Guest.

    The event was attended by several key stakeholders, including members of the World Health Organization (WHO) and officers from the Federal Board of Revenue (FBR).

    During the ceremony, the participants were briefed on the entire process, from the initial confiscation of illicit tobacco and tobacco products to their eventual destruction, in accordance with the law.

    Following the briefing, the distinguished guests collectively set fire to the seized cigarettes, effectively destroying them.

    This operation underscores the RTO Rawalpindi’s commitment to combatting the illegal trade of tobacco products and ensuring compliance with national and international regulations.

    The destruction of these illicit cigarettes also serves as a reminder of the ongoing efforts to protect public health and maintain the integrity of the country’s tax and revenue system.

  • Study reveals foreign aid to Pakistan fails to drive economic growth

    Study reveals foreign aid to Pakistan fails to drive economic growth

    A report by the Pakistan Institute of Development Economics (PIDE) reveals that foreign aid to Pakistan, despite commitments exceeding $200 billion, has failed to deliver sustainable economic growth.

    The report, titled “Foreign Aid Donors and Consultants Analysing Pakistan’s Foreign Aid Inflows and Their Outcomes,” highlights that while about $155 billion has been disbursed from the committed amount, there’s little evidence that these funds have significantly improved Pakistan’s economy.

    PIDE finds that the aid has not met key criteria for effective foreign aid, as outlined in the influential Millikan-Rostow report.

    These criteria include the ability to transfer resources without creating future liabilities, avoiding source-tied aid, promoting sustainable economic development, increasing the marginal savings rate to drive capital formation, and supporting development programmes that enable productive use of additional capital.

    The PIDE report notes that Pakistan’s aid programmes fail to meet these benchmarks.

    According to Mettis Global, the research acknowledges some positive outcomes in specific sectors, such as the United Nations-led vaccination efforts, which have improved public health.

    However, it also points out that this success has led to greater dependency on external sources for vaccines, raising questions about the long-term sustainability of such programmes.

    Overall, the report suggests that despite the significant amount of foreign aid received, Pakistan’s economy has not experienced the desired transformation.

    Even when examining Official Development Assistance (ODA) by sector, the improvements are marginal and do not lead to substantial aggregate economic growth.

    This finding raises concerns about Pakistan’s reliance on foreign aid and underscores the need for more effective and sustainable economic policies.

  • Booming demand for Samsung Galaxy S24 leads to shortage in Pakistan

    Booming demand for Samsung Galaxy S24 leads to shortage in Pakistan

    Samsung Electronics Co. is experiencing a shortage of its Galaxy S24 smartphones in Pakistan due to overwhelming demand for the flagship device, according to Bloomberg.

    Since the device’s launch earlier this year, demand has surged, leading to limited availability across the country.

    The Galaxy S24 series, which is assembled in Pakistan, has garnered considerable interest, particularly for its premium models like the Galaxy S24 Ultra.

    This surge in demand suggests a growing market for high-end smartphones among Pakistan’s more affluent consumers.

    With 192 million mobile phone users, Pakistan is the world’s fifth-most populous nation, representing a significant market for smartphone manufacturers.

    Samsung Electronics acknowledged the shortage in an email statement, stating that the company is working to meet customer demand and expects sales to resume shortly.

    The Pakistani government has introduced financial incentives that have transformed the country’s smartphone industry.

    In 2017, Pakistan primarily imported smartphones, but the majority of handsets are now assembled domestically. This shift has contributed to a growing mobile phone manufacturing sector.

    According to the Pakistan Telecommunication Authority, mobile companies in Pakistan produced about 21 million units last year, with local and Chinese brands such as VGOTEL, Infinix, and Itel leading production. An additional 1.7 million units were imported.

    Despite the shortage, the Galaxy S24 models are crucial for Samsung’s position in the global smartphone market.

    The company lost its top ranking to Apple Inc. last year, marking the first time since 2010 that Samsung was not the world’s leading smartphone maker, according to industry tracker IDC.

  • Pakistan’s forex reserves fall by $73.5 million in one week

    Pakistan’s forex reserves fall by $73.5 million in one week

    The State Bank of Pakistan (SBP) reported a significant decline in its foreign exchange reserves for the week ending April 19, 2024, attributing the drop to external debt repayments.

    The central bank’s reserves fell by $73.5 million, a 0.91 per cent week-on-week reduction, bringing the total to $7.98 billion.

    This decrease reflects Pakistan’s ongoing struggles to maintain a stable foreign exchange reserve position amid mounting economic pressures.

    The SBP issued a statement explaining the decline, citing debt repayments as the primary reason for the dip. “During the week ended on April 19, 2024, SBP’s reserves decreased by $74 million to $7.98 billion due to external debt repayments,” the statement read.

    Concurrently, the total reserves of Pakistan, which include those held by commercial banks, also fell. The country’s total reserves dropped by $93.2 million, a 0.7 per cent week-on-week decrease, to $13.28 billion.

    Commercial banks’ reserves diminished by $19.7 million, or 0.37 per cent week-on-week, bringing their total to $5.3 billion.

    Last week, the SBP reported a slight increase in its reserves, up by $14.4 million despite a $1 billion Eurobond repayment. However, this week’s decline indicates continued pressure on the country’s foreign exchange reserves.

    In a recent development, the International Monetary Fund’s (IMF) executive board is set to meet on April 29 to discuss the approval of a $1.1 billion funding tranche for Pakistan.

    This funding represents the second and final installment of a $3 billion standby arrangement with the IMF, which was agreed upon last summer to avert a sovereign default.

    The current arrangement with the IMF is due to expire at the end of this month, prompting Pakistan to seek a new long-term and larger loan from the IMF.

    Finance Minister Muhammad Aurangzeb expressed optimism about the country’s foreign exchange reserves, stating that he expects the reserves held by the SBP to rise to around $9–10 billion by the end of the current fiscal year.

    Despite the recent decline, the total liquid foreign reserves have increased by $4.12 billion, or 44.98 per cent, since the beginning of the fiscal year.

    Additionally, the current calendar year has seen an increase of $0.61 billion, or 4.79 per cent.

    The fluctuations in Pakistan’s foreign exchange reserves underscore the country’s ongoing economic challenges and the critical importance of securing international funding to maintain financial stability.