Tag: economic downturn

  • PSX faces record single-day plunge, shedding 2,534 points 

    PSX faces record single-day plunge, shedding 2,534 points 

    On Tuesday, Pakistan Stock Exchange’s (PSX) KSE-100 index experienced a significant downturn, plummeting by 2,534 points, or 4.11 per cent, culminating in a closure at 59,171—a record for the largest single-day drop in absolute points. 

    Since its zenith on December 13, the index has incurred a substantial loss of 7,923 points, reflecting an 11.81 per cent decline.

    The market correction intensified during today’s session, attributed to pronounced selling pressures in the final week of the year, compounded by prevailing political uncertainty. 

    In the latest session, the index showcased a wide trading range of 2,607.74 points, registering an intraday high of 61,634.55 (down by 70.54 points) and a low of 59,026.81 (down by 2,678.28 points). The total volume of the KSE-100 index reached 396.481 million shares.

    Within Tuesday’s session, 5 out of the 100 index companies closed higher, 91 closed lower, 1 remained unchanged, and 3 were untraded. 

    The decline of the KSE-100 index was particularly influenced by sectors such as oil and gas exploration companies (-508.87 points), commercial banks (-386.15 points), power generation and distribution (-271.96 points), cement (-211.88 points), and fertiliser (-194.77 points).

  • Honda Civic sales in Pakistan drop by 72.36%

    Honda Civic sales in Pakistan drop by 72.36%

    Sedan car sales experienced a significant downturn, particularly notable in Honda Civic sales, which suffered a substantial decline of 67.33 per cent in October 2023 on a month-over-month basis and 72.36 per cent on a year-over-year basis in Pakistan. 

    This decline can be attributed to production interruptions, elevated car prices, and a reduction in car financing. 

    Specifically, Honda Atlas Cars Limited reported the sale of only 379 Civic units in October 2023, a notable drop from the 1371 units sold in October 2022.

    In contrast, Toyota Corolla sales exhibited a relatively better performance, with a 24.19 per cent decrease on a month-over-month basis and a 56.69 per cent decrease on a year-over-year basis in Pakistan. 

    To provide precise figures, Toyota Indus Motor Company sold 796 Corolla units in October 2023, as opposed to the 1838 units sold in October 2022.

  • Output of Pakistan’s main industries declines by over 10%

    Output of Pakistan’s main industries declines by over 10%

    The economic landscape of Pakistan has faced a notable setback, with the Large Scale Manufacturing Industries (LSMI) output experiencing a decline of 10.26 per cent during the fiscal year 2022–23 when compared to the same period in 2021–22. This concerning information has been revealed by the Pakistan Bureau of Statistics (PBS), shedding light on the current state of the country’s industrial sector.

    The provisional Quantum Index numbers of the large-scale manufacturing industries (QIM) further underscore this decline. Specifically, the LSMI output took a significant hit in June 2023, plummeting by 14.96 per cent compared to June 2022. However, there is a glimmer of hope, as the output experienced a slight uptick of 0.98 per cent in comparison to May 2023.

    Diving into the specifics, the LSMI Quantum Index Number (QIM) for June 2023 has been estimated at 112.21, while the QIM for the period of July–June 2022–23 stands at 114.83. These numbers provide a quantitative overview of the challenges faced by the manufacturing sector during this time frame.

    The foundation for these indices lies in data provided by several key agencies, including the OCAC, Ministry of Industries and Production, Ministry of Commerce, and Provincial Bureau of Statistics (BoS). Their collaboration has enabled the creation of the provisional quantum indices of LSMI for June 2023, based on the 2015–16 base year.

    Various industries have played a role in shaping this decline, with notable contributors including food (-1.14 per cent), tobacco (-0.65 per cent), textiles (-3.65 per cent), garments (2.79 per cent), petroleum products (-0.89 per cent), chemicals (-0.52 per cent), pharmaceuticals (-1.85 per cent), cement (-0.86 per cent), iron and steel products (-0.24 per cent), electrical equipment (-0.54 per cent), and automobiles (-2.21 per cent).

    Analysing the production trends over a larger period, July–June 2022–23, as compared to July–June 2021–22, reveals a mixed picture. While there have been increases in production for wearing apparel, furniture, and other manufacturing (football), there have also been notable decreases in food, tobacco, textile, coke, and petroleum products, pharmaceuticals, chemicals, non-metallic mineral products, machinery and equipment, automobiles, and other transport equipment.

    Industries that demonstrated growth during the July-June period include wearing apparel (27.16 per cent), leather products (1.29 per cent), furniture (35.51 per cent), and other manufacturing (football) (28.99 per cent). However, sectors such as food (6.90 per cent), beverages (6.43 per cent), tobacco (28.36 per cent), textiles (18.68 per cent), and many others have faced declines, indicating a complex and multifaceted economic situation.

    In particular, the petroleum products industry has witnessed a substantial decline of 13.39 per cent during July–June 2022–23. High-speed diesel and furnace oil also experienced negative growth, with decreases of 17.09 per cent and 14.65 per cent, respectively. On the other hand, jet fuel oil managed to buck the trend with a growth rate of 6.63 per cent, suggesting a nuanced narrative within the energy sector.

    Cement production, a crucial indicator of construction and infrastructure activity, also faced a decline of 13.67 per cent during July–June 2022–23, highlighting potential challenges in these sectors.

    As Pakistan navigates through these economic fluctuations, stakeholders and policymakers will need to closely analyse the contributing factors to these declines and strategize effectively to bolster the country’s manufacturing sector, ensuring sustainable growth and resilience in the face of challenges.

  • Crisis on wheels: Pakistan’s automotive industry grapples with mass layoffs and 70% sales drop

    Crisis on wheels: Pakistan’s automotive industry grapples with mass layoffs and 70% sales drop

    The automotive industry in Pakistan is facing a severe setback as thousands of workers were laid off due to a decline in vehicle and spare parts sales. The government’s ban on raw material imports, coupled with the depreciation of the rupee and soaring inflation, has caused a significant strain on the industry. With foreign exchange reserves dwindling and the local currency hitting historic lows against the US dollar, the economic crisis has reached unprecedented levels.

    Pakistan finds itself in the midst of its most formidable economic crisis to date, as the State Bank of Pakistan’s foreign exchange reserves have plummeted to a mere $4 billion. This amount is barely sufficient to cover three weeks of imports, raising concerns about the country’s economic stability. The ban on raw material imports, implemented to prevent the outflow of US dollars, has caused a sharp decline in industrial output and triggered widespread layoffs and unemployment.

    Dollar crunch and inflation

    In the midst of the worsening dollar crunch, commercial banks have also halted the opening of letters of credit (LCs), leaving importers in a state of uncertainty regarding the provision of the necessary funds for already placed orders. This further exacerbates the challenges faced by the automotive industry, hindering its ability to procure essential raw materials and sustain production.

    The country is grappling with soaring inflation rates, which surpassed 36 per cent in April, the highest recorded since 1964. As a result, consumer purchasing power has diminished significantly, leading to a sharp decline in vehicle sales. Munir Karim Bana, Chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), laments the dire situation, stating that thousands of workers have been laid off, and production has ground to a halt. The closure of auto manufacturing plants has further exacerbated the industry’s challenges.

    Auto parts manufacturers are grappling with demurrage charges as raw materials worth billions of rupees remain stuck at the Karachi port. PAAPAM, responsible for supplying approximately 90 per cent of local vehicle parts, is bearing the burden of these charges. Furthermore, with production units closed, income streams have dried up, exacerbating the financial strain on the industry.

    Rana Ihsan Afzal, the coordinator to Prime Minister Shehbaz Sharif on commerce and industry, acknowledges that the automotive industry’s full efficiency may not be restored until the revival of the IMF bailout program. As a sector heavily reliant on imports and foreign currency, the automotive industry is particularly vulnerable to the country’s economic challenges. The delay in the staff-level agreement on the ninth review of the IMF bailout deal signed in 2019 has further hampered the industry’s prospects.

    Revival prospects and government assurance

    Amid the decline in sales and mass layoffs, the coordinator to the Prime Minister expressed his concern but assured that the government is tirelessly working to revive the economy. The coordinator acknowledges the temporary phase that necessitates import restrictions on the automotive industry to protect foreign exchange reserves. However, he remains optimistic that once reserves are replenished, the industry will experience a significant upturn.

    Pakistan’s automotive industry is facing a dire crisis, with plummeting sales, layoffs, and manufacturing plant closures. The ban on raw material imports, along with the economic challenges of soaring inflation and dwindling foreign exchange reserves, has pushed the industry to the brink. Despite the difficulties, the government is committed to revitalizing the sector and assuaging the concerns of manufacturers.