Preliminary EU-harmonised statistics indicated that inflation in France surged more than projected in May to a new high, putting additional pressure on President Emmanuel Macron before upcoming legislative elections.
Consumer prices rose 0.7 per cent in May, for a 12-month inflation rate of 5.8 per cent, up from 5.4 per cent in the last month and the highest rate since France started working on European Union methodology to generate the numbers in the early 1990s, as per the INSEE statistics.
Inflation was predicted to grow to 5.6 per cent on average, considering a poll of eight economists in a report by Reuters.
High inflation is at the top of France’s political agenda, and following the elections, Macron’s government has promised a new wave of measures to protect buying power.
Apart from Malta, France has managed to maintain the inflation lower than the rest of the EU due to a 25 billion euro package of measures that includes, among other things, hefty price limits on gas and electricity.
Annual inflation in France, as measured by the national consumer price index, climbed to 5.2 per cent in May from 4.8 per cent in April, reaching its highest level since September 1985, according to INSEE.
This month, economists surveyed by Reuters projected an average growth rate of 5.0 per cent. In France, the national index is regularly monitored, whilst outside the country, the EU-harmonised index is used to assess inflation rates among euro-area nations.
Airlift Technologies, a national grocery delivery service, has laid off 31 per cent of its workforce.
The company posted a statement on its official LinkedIn account confirming the layoff of its workforce; “In the light of the significant downturn in global capital markets, Airlift is undertaking a strategic realignment to reduce the surface area of operations and to increase focus in key areas that drive sustainability and profitability.”
“The decision to part ways with talented teammates has been incredibly challenging for the company. For impacted teammates, Airlift stands committed to providing financial and placement support to help find new roles,” the statement read.
Quick commerce startup Airlift closes down all cities apart from Karachi, Lahore and Islamabad, lays off 31% staff. pic.twitter.com/hSM8Cz3kYE
Usman Gul, the 33-year-old co-founder, and CEO commented on the company’s decision to permanently shut down, saying, “I think if the lens of change is ‘Did Airlift offer great returns to investors?’ then yes, regrettably, it was unsuccessful. If you’re talking about bringing Pakistan into a new reality or altering the entire ecology, then by that yardstick of success, we’ve come a long way,” Gul told Rest of World.
“In many ways, Airlift raised the bar of ambition for Pakistani startups in a big way. Our teams at Airlift redefined the standard of execution, strategy, building a world-class culture, developing a cutting-edge product, raising sizable fundraising rounds,” Gul continued.
What is the point of raising the greatest series B in the nation if the business fails 11 months later? Gul believed that these were improper inquiries when questioned about the $85 million that Airlift blew through in less than one year. He said that the appropriate questions to ask were: “What enabled Airlift to raise $100 million-plus in three years? That’s never happened in Pakistan before. What did this team do differently?”
Airlift was started in 2019 by Usman Gul, Ahmed Ayub, Awaab Khaakwany, Meher Farrukh, Muhammad Owais, and Zohaib Ali as a mass-transit option that connected consumers with buses at reduced costs. Due to the pandemic, Airlift’s transportation operations were halted in March 2020. During the covid pandemic, the company then pivoted its business plan and launched Airlift Express, a grocery delivery service with $10 million in investment. Airlift, last year in August, secured a mega-round of funding of $85 million dollars.
A former Airlift employee described the layoff as “shocking, unexpected, and heartbreaking.”
WHAT FINANCIAL EXPERTS THINK HAPPENED AT AIRLIFT
Ariba Shahid, Financial Journalist at Profit Magazine and DealStreetAsia, while talking to The Current about the layoffs at Airlift, said, “While downsizing is sad considering people lose their livelihoods, sometimes young startups need to scale back operations, recalibrate and start differently or fresh,” adding “In order to do so, they sometimes downsize. There is nothing wrong in doing so. I don’t think any business downsizes unless it’s absolutely necessary.”
Taking about the reason behind the layoffs Ariba added, “There are a number of ways to look at it. One likelihood is that Airlift’s funding was contingent on it attaining milestones. So maybe, they did not get the entire $85 million.”
“The other scenario is that they burned through approximately $10 million a month in customer acquisition costs and expansion. It is difficult for consumers to change their consumption pattern and move onto quick commerce. It also costs a lot to expand and grow, especially internationally, like Airlift did in South Africa. The macroeconomic environment with rising inflation and diminishing purchasing power makes it even more difficult.”
“Airlift was one of the bigger names in the ecosystem. The same way Airlift was used as an example while raising funds, it may be seen as a warning sign. However, the global liquidity crunch plays a bigger role at this point in time, in addition to Pakistan’s weakening macroeconomic sentiments.”
“There is no right or wrong way to run a startup at this point because the ecosystem is very nascent. There are no examples locally to follow. However in order to succeed startups need to ensure they are clean, transparent, do not fudge numbers, accept realistic valuations, stop obsessing over large rounds, and know when to stop blitz-scaling,” she added, talking about Pakistani startups.
While answering a question about the situation of Pakistan’s job market Ariba said, “Too soon to say that but yes, one can expect more layoffs across industries considering working capital will be more expensive, political instability, low investment inflows.”
Aitlift’s Lahore office
Dr Aqdas Afzal, Program Director and Assistant Professor of Economics, Habib University while talking to The Current about the possible reason behind the layoffs said, “The reason is not related to the Pakistani market, there is an economic downturn in the entire world. The inflation in UK and US is highest in last 40 years.”
He continued by adding that, “the main input of Airlift’s delivery is fuel and as considering the fuel inflation, they have withdrawn their services from those markets and cities from where they don’t get much sales and find it difficult to drive “sustainability and profitability.”
“I don’t think Pakistani startups are doing anything wrong, as we have seen they have been able to get get a lot of seed money.”
He further said, “In the coming days you will see a lot more startups booming in Pakistan.”
“The government needs to provide reliable, fast speed and affordable internet, because it is slowly becoming the weakest link for Pakistani startups.”
“I don’t think that Pakistan’s job market is collapsing,” said Afzal while answering a question about Pakistan’s job market.
He added, “We are in low value-added end of the spectrum in terms of freelancing skills and we should see if our educational institutions are teaching the level of coding that freelancers around the world are doing.”
Aitlift’s Lahore office
WHAT LAID-OFF EMPLOYEES HAVE TO SAY
Airlift released a database of the names of113 staffers who were abruptly terminated from their positions and were then ‘open to work.’ The employees listed in the database served in various departments of the cash-strapped venture, including operations, human resources, customer service, rider support specialists, and several software engineers, that were based in Pakistani cities including Karachi, Lahore, Islamabad, Gujranwala, Faisalabad, Hyderabad, and Peshawar, with the remainder in South Africa.
“The layoff news shocked the entire workforce as we had no idea the company would announce a massive layoff along with closing key warehouses in different cities,” an employee at Airlift Head Office Lahore, told The Current, “I was aware that the stock market was collapsing dramatically, with some well-known corporations laying off a large number of staff, but I had no idea that the capital market’s volatility would have such an immediate impact on Airlift.”
According to another insider, the company was unable to generate sufficient profit to entice international investors, which is why layoffs had to be done.
Khan revealed that he is looking for work and has undergone three job interviews so far. “After the news of the Airlift went viral on social media, I was approached by a couple of companies and individuals, although I have yet to receive job confirmation,” he claimed.
“I have had a wonderful time at the Airlift. The management took good care of the overall staff. The payouts were never delayed,” Husnain Raza, who was employed as a Rider Operations Specialist at Airlift barely a year ago, told The Current. “The company had to take this horrendous step or it could’ve been dissolved.”
Ex-Operations Lead at Airlift Faisalabad, stated that he is not concerned since the company has offered to compensate the employees who were laid off without notice with 1-2 months of salary. “I assume I’ll find another job until then,” he asserted.
The Current has reached out to the founders of Airlift for a comment on why the layoffs took place and about the future of the company. We are still waiting for a comment and until we get one, here is the statement issued by the company on the dismissal of their staff.
GLOBAL IMPACTOF THE ECONOMIC DOWNTURN
The impact of the global economy is not just being seen at Airlift or in Pakistan.
Cutbacks, contract terminations, and layoffs have impacted at least 5,600 startup employees since the beginning of 2022 at a number of unicorns, global tech companies in India, and growth-stage startups.
Startups like Unacademy, Furlenco, and many others have cut back and downsized in order to improve profitability. Better.com, a mortgage technology company based in the United States, has also asked employees to sign voluntary separation agreements. These layoffs occurred at Better.com’s India operations, where another 920 employees were let go earlier this month, following a total of over 3,000 laid off by April.
Unacademy, the edtech unicorn, laid off over 1,000 employees and shut down its online education platform, PrepLadder, in April 2022. More than 800 employees at BYJU’s-owned WhiteHat Jr were told to resign because they refused to work from the office.
Furthermore, Cars24, a marketplace, laid off workers in order to cut costs and move toward automation. In this downsizing, the unicorn may lay off up to 600 employees soon.
Alongside startups, some big names, such as Netflix, have cut staff this year, with some blaming the COVID-19 pandemic and others faulting ‘overhiring’ during periods of speedy growth. In 2022, Robinhood, Glossier, and Better are just a few of the technology firms that have significantly reduced their staff numbers.
The capital markets have taken a beating in 2022, and this has filtered down to the private sector. Fears about inflation, rising interest rates, and geopolitical issues have all contributed to a volatile financial market.
Startups, particularly those that profited from a pandemic growth that is now slowing, are beginning to feel the strain as well. Valuations have begun to fall, especially at the later phase, and entrepreneurs say it is far more challenging to raise new funding in such a situation.
A multitude of companies that experienced pandemic-related surges are experiencing a correction as a result of a variety of factors, including rising inflation, economic distress, war, and shifting consumer taste buds. Companies such as Meta and Twitter have publicly announced hiring freezes, and Snap confirmed this week that it is slowing hiring as revenue targets are missed.
If a company is bleeding money, it will most likely begin to lay off employees, preserving only those who are required to work to retain the business’s level of operations. If the company dissolves, the remaining workers may be laid off as well.
Among the most likely causes for layoffs is that the company is trying to cut costs in some way. This could be because the company needs to pay off debts, fewer sales or the company no longer has the financial backing of investors like Airlift.
As technological advancements and automation grow common in businesses, employers sometimes lay off employees in order to cut costs and reduce position redundancy. Moreover, if the employee satisfies certain requirements and is prepared to make the change, the organisation may commit to finding another role for them and transferring them to the position.
In the budget (2022-23), the government intends to impose a time-limited levy or additional income tax on the yearly income earned by the steel industry, pharmaceutical business, and other profit-generating segments, as well as increase the minimum tax from two to six percent on the import of edible oil
According to reliable sources, the government has made the decision to increase the rate of least tax on the import of edible oil from two to six percent in the next fiscal budget to boost the occurrence of levy on this large profit-earning sector. The steel sector’s minimum tax rate will be raised in the new budget.
It is worth noting that the fresh charge will only be levied on industries and sectors that make massive profits, and it would only be in place for a limited time.
According to Brecorder, the steel sector’s profits have increased by 20-30 per cent, but they are not paying the requisite tax bills. As a consequence, an extra income tax or levy on the yearly earned income by the steel industry, pharmaceutical sector, and other sectors earning windfall profits has been proposed for 1-2 years.
Added income taxor levy will be paid in conjunction with the filing of tax records. The levy would be time-limited and could be imposed for one or two years.
The Federal Board of Revenue (FBR) levies a two per cent least tax on edible oil imports, which is decided to ascend to six per cent beginning with the next fiscal year. Earnings in the edible oil industry are very high, with massive profits, but tax payments are consistent or on the low side.
The Federal Board of Revenue (FBR) is updating a list of high-profit industries based on tax financial records, annual financial statements, and third-party data.
A new section in the Income Tax Ordinance 2001 would be introduced through the new Finance Bill 2022 for the imposition of the said levy on high profit earning sectors.
Prime Minister (PM) Shehbaz Sharif on Friday said that Pakistan is likely to receive an investment worth $1 billion from Saudi Arabia.
During his speech, the PM asked businessmen to speak about their problems and said: “We need to analyse the economic situation with patience.”
The premier then requested the business community to provide solutions as the local currency has lately been fluctuating significantly against the United States (US) dollar. “I am not here for political point-scoring,” PM Shehbaz clarified.
“When I took the oath on April 11, the rate of United States (US) dollar against the Pakistani currently was 189,” said Shehbaz.
“The Rs. 60-65 increase in the rupee value against the greenback wasn’t the coalition government’s fault,” Shehbaz said, adding that when the former government speculated that they would be ousted, they reduced the petroleum prices despite a price hike in the international market, thus going against the conditions of the International Monetary Fund (IMF).
“During the Pakistan Tehreek-e-Insaf’s (PTI) tenure loans worth Rs22,000 billion were taken which shows an 80 per cent increase from 2018,” he said, adding that “powerful echelons” in the country supported their “favourite” person.
Shedding light on his decision regarding the ban imposed on the import of luxury and non-essential items, PM Shehbaz said that while he banned the import of certain items for some time, he did not increase the duties because the “elite class would have still purchased imported items after paying duties.”
The premier said: “Pakistan cannot afford to purchase gas worth $20 billion; we have to slowly and gradually move towards solar and wind energy.”
“If green energy comes to Pakistan, we will save Pakistan’s funds,” said PM Shehbaz.
The premier arrived in Karachi earlier today on a day-long visit.
Pakistan Bureau of Statistics (PBS) reported that Pakistan’s textile group exports in July-April 2021-2022 reached a new high of $15.981 billion, up from $12.688 billion in the same period last year, a 25.96 per cent rise.
Exports of the textile group climbed by 7.01 per cent month over month to $1.739 billion in April 2022, compared to $1.625 billion in March 2022. Textile group exports increased by 30.50 per cent year over year in April 2022, compared to $1.332 billion in April 2021.
Cotton yarn exports increased by 22.11 per cent from July to April 2021-22 to $1.006 billion, compared to $823.952 million in the same period the previous year, and declined by 4.95 per cent in April 2022 to $97.655 million, compared to $102.736 million in the same month the previous year.
The country’s overall exports from July to April 2021-22 were $26.247 billion, up from $20.905 billion in the same time last year, a 25.55 per cent rise. Pakistan’s exports in the last month (April 2022) were $2.897 billion, up 4.32 per cent from $2.777 billion in March 2022 and up 30.61 per cent from $2.218 billion in April 2021.
Major export goods
Knitwear: Rs90,096 million
Readymade garments: Rs64,669 million
Bed wear: Rs51,398 million
Cotton cloth: Rs38,763 million
Towels: Rs19,974 million
Cotton yarn: Rs18,016 million
Made-up articles: Rs15,277 million (excluding towels and bedwear)
A programme financed by the United States (US) Embassy and introduced by the Indus Entrepreneurs (TIE) Islamabad, sent nine Pakistani women entrepreneurs to the US this week.
The Accelerator Programme for Women Entrepreneurs is a one-of-a-kind training programme and competition that offers women-owned Pakistani start-ups exposure to American business tools, coaching, and mentorship.
450 women-owned companies responded enthusiastically to the programme. The top 12 start-ups were chosen for a 15-week Founders Institute Acceleration Programme after a comprehensive round of mentoring sessions and pitching contests.
Nine women entrepreneurs were chosen from among the 12 start-ups for an in-person acceleration exchange. Women entrepreneurs will have the opportunity to attend important conferences and visit the offices of big corporations like as Microsoft, Amazon, Facebook, Twitter, and PayPal during their tour.
They’ll also stop by 9 Mile Labs, Kiwi Tech, Angel Pad, and Alchemist, all of which are situated in the United States. Throughout the eight-week programme, the participants will have many networking opportunities and will pitch to selected US-based investors on both the east and west coasts.
Minister for Information Technology and Telecommunication Syed Amin-Ul-Haque said that this initiative offers Pakistani women entrepreneurs connectivity to global startups and foreign investors, speaking at a ceremony organised by the TIE Islamabad chapter before the departure of the Pakistani women entrepreneurs to the United States.
Following local vehicle manufacturers in Pakistan, Pak Suzuki Motors Company Limited (PSMCL) has announced a hefty price hike for their whole lineup. The new charges are effective immediately (May 9, 2022).
Suzuki’s flagship hatchback, the Suzuki Swift GLX CVT, has received a price increase of Rs129,000 in its prior price of Rs3,169,000. The recently introduced vehicle now costs Rs3,298,000.
After a price rise of Rs100,000 from its previous price of Rs2,662,000, the Suzuki Cultus AGS will now be available for Rs2,762,000.
The price of the Suzuki Bolan AC variant has increased by Rs45,000 from its previous price of Rs1,370,000. Bolan is presently on the market for Rs1,415,000.
Suzuki Alto VXL AGS, the automaker’s best-selling vehicle, will now be available for Rs1,951,000, up to Rs65,000 from its previous price of Rs1,886,000.
Following Finance Minister Miftah Ismail’s admittance of being unaware of the third generation internet, or Web 3.0, Pakistan Tehreek e Insaf (PTI) leader Zulfikar Bukhari offered him “free consultation and training” on Web 3.0.
“We’ll give you free consultancy services & coaching on Web 3.0 Miftah, but please don’t embarrass Pakistan like that next time,” Zulfi Bukhari said in a tweet quoting a video of the Atlantic Council.
We’ll give you free consultancy services & coaching on Web 3.0 Miftah, but please don’t embarrass Pakistan like that next time https://t.co/jJjbpBU2O9
In the viral video, Miftah is asked about the rise of Web 3.0, which the questioner believes will be a $100 billion dollar export opportunity for Pakistani talent in the next 20 years.
He also inquired what he felt about providing new economic prospects for Pakistanis, citing the potential of digital currency.
“Let me simply declare that I genuinely don’t know what Web 3.0 is,” Miftah said bluntly and “shamelessly..I don’t know much about this, but I do know that Pakistani fintech and new technology businesses garnered a lot of money last year and from a very low starting point”.
He added that we want them to thrive as much as possible, I’m not sure how much we can do to assist them.
What is Web 3.0?
Web 3.0 is a new kind of internet that not only accurately translates what you type, but also understands what you say, whether through text, voice, or other media, and where all of the content you consume is more personalised than ever before.
There are a few early-stage Web 3.0 applications that exist today, but their true potential cannot be seen until the new internet is fully integrated into the web infrastructure.
Web 3.0 refers to the next generation of the internet, in which websites and apps will be able to handle data in a clever human-like manner using technologies such as machine learning (ML), Big Data, and decentralised ledger technology (DLT), among others.
Tim Berners-Lee, the inventor of the World Wide Web, dubbed Web 3.0 the Semantic Web, with the goal of creating a more autonomous, intelligent, and open internet.
Data will be interconnected in a decentralised form, which would be a big leap ahead from our present generation of the internet (Web 2.0), where data is largely housed in centralised repositories.
Users and machines will be able to engage with data as well. However, programmes must be able to comprehend information both conceptually and culturally in order for this to happen. With this in mind, the semantic web and artificial intelligence are the two cornerstones of Web 3.0. (AI).
In the first eight months of the fiscal year 2021-22, Pakistan’s textile and garment exports grew to $1.65 billion. The Pakistan Bureau of Statistics (PBS) estimates that the textile and apparel sector brought in $12.607 billion this time, compared to $ 9.999 billion in exports from July to February 2020-21.
Knitwear exports surged by 33.86 per cent to $3.302 billion on a year-over-year (YoY) basis, while non-knit readymade clothes trade increased by 25.11 per cent to $2.516 billion. Additionally, cotton yarn exports increased by 34.40 per cent to $815.375 million, up from $606.690 million the previous year.
Cotton fabric trade climbed by 28.23 per cent in 2022, reaching $1.584 billion in value. Also, over the eight months of 2021-22, the distribution of bed clothing jumped by 20.34 per cent.
The industry has engaged in synthetic fiber imports, which increased by 31.65 per cent from July to February 2021-22, and the cost of artificial silk yarn soared by $ 569.256 million.
Consequently, the value of textile machinery in Pakistan has climbed dramatically over the last eight months, reaching $577.249 million.
For those unaware, Pakistan’s textile sector has the capacity to generate $30 billion in annual revenue. The country’s leaders and economic experts should assess the existing economic situation and devise an effective economic strategy to boost textile exports.
To summarise, the industry has tremendous potential and can significantly contribute to the country’s economic success by providing job opportunities. Which could help the country’s GDP and GNP grow even more.
Oil prices rose on April 13, after concerns that declining output in sanctions-hit Russia may affect supply, following the Russian announcement that peace negotiations to stop its invasion of Ukraine had reached a stalemate.
Consequently, Brent crude futures were up 59 cents, or 0.6 per cent, to $105.23 a barrel, while West Texas Intermediate (WTI) crude futures were up 60 cents, or 0.6 per cent, to $101.20 a barrel. The previous session saw both contracts rise by more than 6%.
On Tuesday, Russian President Vladimir Putin criticised Ukraine for the termination of peace talks and stated that Russia will not abandon its “special operation” to disarm its western neighbor.
He stated that peace talks with Ukraine are at a stalemate, but that the seven-week operation is going as planned. In a note, ANZ oil experts stated that this raises the threat of the prolonged potential of supply disruptions in the oil sector.
According to those familiar with the figures, Russian oil and gas extract output declined below 10 million BPD on April 11, the biggest drop since July 2020, as a result of sanctions imposed by numerous nations after Russia invaded Ukraine and logistical difficulties, which hindered business.
This is quite serious as Russia is the world’s second-largest oil exporter.
According to reports, Russia’s Energy Minister Nikolai Shulginov said late Tuesday that the government was willing to sell oil and oil products to “friendly countries in whatever price range,” adding that Moscow was focused on guaranteeing the oil sector’s proper functioning.
Meanwhile, indications of a partial relaxation of some of China’s strict COVID-19 restrictions have fueled optimistic sentiment between some market players this week.
