Pakistan economic crisis: Several biggest entities in the crisis-hit Pakistan have halted operations as they ran out of raw materials or foreign exchange which has compounded the troubles of an economy that is trying to avert a debt default, as per reports.
The local division of Suzuki Motor Corp. extended the closure of its manufacturing facility until February 21 in a statement to the stock exchange on Friday, citing the continued scarcity of parts.
The tyre and tube manufacturer Ghandhara Tyre & Rubber Company stopped down on February 13 due to "immense difficulties" with importing raw materials and getting commercial banks to clear shipments."
These are only two of a group of listed companies that also includes fertiliser, steel, and textile producers that have closed their factories permanently or sporadically due to a lack of inventory, cash, or even demand. The country's unemployment rate would rise as a result of these closures, according to Tahir Abbas, head of research and investment at Arif Habib Ltd. "The multi-decade inflation has caused the general demand to slow down. Hence, you observe destruction caused by typical demand. Also, we are taking administrative steps to slow the economy "As reported by Bloomberg, Abbas stated.
Local subsidiaries of Honda Motor Co. and Toyota Motor Corp. also had lengthy factory closures. According to data from the Pakistan Automobile Manufacturers Association, this affected Pakistan's car sales, which dropped 65% to the lowest level in over three years in January compared to the same month last year.
Engro Fertilizers Limited, Fauji Fertilizer Bin Qasim Limited, Nishat Chunian Limited, Amreli Steels Limited, Millat Tractors Limited, and Diamond Industries Limited are some of the businesses that have also stopped or scaled back operations. Compared to crises we had in 2018 or 2008, the situation this time has become more grave "Abbas predicted that economic growth will decrease from 6% last fiscal year to 1% to 1.25 % this fiscal year, which ends in June.
Prices for necessities are rising amid mounting worries about the economy, with milk costing Rs. 250 per litre and chicken costing Rs. 780 per kilogramme in the nation. Defense Minister Khawaja Asif claimed that the nation has already "gone bankrupt." ".
In the first two quarters of 2022–2023, Pakistan's external debt servicing increased by 70%, aggravating the country's currency shortage, according to Dawn. For the week ending February 10, the nation's foreign exchange reserves held by the central bank increased by US$276 million to $3.193 billion. The liquid foreign exchange reserves for the nation were $8.702 billion.
As the IMF team arrived to negotiate the specifics but left last week without reaching a final deal, the nation is in a panic. Even if Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar agreed to every prerequisite. Pakistan now has higher taxes and fuel costs.
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