KARACHI: Pakistan’s economic meltdown has eroded between 30 and 40 percent jobs from the country’s labor market, pushing more people below the poverty line, as the country takes tough measures to implement conditions attached to an International Monetary Fund (IMF) bailout package, traders and economists said.
Pakistan’s ruling Tehreek-e-Insaf (PTI) came into power on the back of promises to provide 10 million jobs last year, but is struggling to retain even existing jobs as the country’s economic growth plummeted from 5.8 percent to 3.3 percent in the last fiscal year, and is predicted to slow down further to 2.4 percent in the current fiscal year, FY20.
The country, that signed off on a $6 billion stabilization program from the IMF has implemented tough taxation measures, increased tax rates and prices of energy, and devalued its currency more than 40 percent while jacking up key interest rates to 13.25 percent.
These measures have declined industrial production and aggregate demand resulting in more unemployment in society, according to experts and industry insiders.
“Last year, it is estimated that around one million people lost (their) jobs, and this year as the economy has slowed down it is expected that around 800,000 to one million more people will be rendered jobless,” Dr. Hafiz A. Pasha, senior research economist and a former finance minister of Pakistan, told Arab News.
He blamed the government’s negotiations of the IMF stabilization program, and compared the current state of Pakistan’s economy with a “vehicle stopped in a way...that it has completely collapsed.”
“The budget is heavily taxing basic commodities and services. The speed and nature of adjustment is all flawed. During 2018-19, four million more people became poor. That may be the same or more this year,” he said.
In recent years, import-led consumption had propped up growth in the South Asian country of 208 million people, and helped hide the problems of an economy riddled with inefficiency and without a strong export base.
Now, industrialists and traders say every sector of the economy is bearing the brunt of the economic meltdown, which has forced industries to cut back on their production and manpower as demand dries up.
“The auto-industry has started closing down, and the production has reduced by more than 50 percent,” Dr. Mirza Ikhtiar Baig, Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry, told Arab News.
“Similarly, the same situation is (being faced by) our textile industry. The banks charge interest rates at 16-17 percent due to which the financial cost...has become very expensive,” he said.
“The defaults (on loans) are now becoming higher... the default of only the textile sector is 30 percent as of today,” Baig said.
This week, Indus Motors, the makers of Toyota cars, announced a shutdown of their manufacturing plant in Pakistan for the rest of September, following a fall in the sale of vehicles as car prices skyrocketed, due to rupee depreciation and taxation measures.
“This is painful,” Baig said. “I can’t quantify it, but the job cuts are in lacs (hundreds of thousands). Every industry has laid off workers and closed down shifts,” he said.
With an estimated job multiplier of up to eight times for every direct job in the auto sector, auto assemblers and the auto vendor industry is on edge.
“Car makers have reduced their shifts, cut down their working hours and are sending workers on compulsory holidays. Sales are down 60-70 percent,” Aamir Allawala, a leading auto-parts maker, told Arab News.
“A similar slump has been recorded in the production of motorcycles, tractors, trucks and buses,” he said.
As bigger industries face the challenges of survival, the country’s small businesses now find themselves on the brink of collapse, with Khan’s government facing mounting pressure as rising prices squeeze the middle class that helped carry it to power.
“The demand of jewelry has eroded by 50 percent which has forced about 30-40 percent highly skilled workers to look for other options like selling vegetables, bread etc.,” Mairaj Ahmed Khan, President of the All Pakistan Zargaran Jewelers and Gems Association, told Arab News, with some manufacturers saying they had laid off half their labor force.
“Our business has suffered...because the retailers have no demand. We have reduced about 50 percent of labor because I have no orders. The industry is dying because there is no customer in the market and no demand,” Adnan Qadri, a wholesale jewelry manufacturer, told Arab News.
“The severity is unprecedented,” Majyd Aziz, President of the Employers Federation of Pakistan, told Arab News.
“And those who become the victims of downsizing or layoffs... the chances are rare that they (will) get jobs easily,” he said, adding that despite an overwhelming inflow of job applications, even ideal candidates had to be turned down.
Over 30 percent of Pakistan’s workers laid off amid economic meltdown — industry insiders
Over 30 percent of Pakistan’s workers laid off amid economic meltdown — industry insiders
- During last fiscal year, a million people lost jobs and four million were pushed into poverty: Dr. Hafiz Pasha
- “Unprecedented severity” is squeezing the middle class that brought PTI government to power
Pakistan PM vows to ‘break any hand’ threatening relations with Saudi Arabia
- Statement comes after Imran Khan’s wife released a video message widely viewed as critical of the Kingdom
- Pakistan and Saudi Arabia are close allies, with nearly 3 million Pakistanis living and working in the Kingdon
ISLAMABAD: Prime Minister Shehbaz Sharif on Friday vowed strict action against anyone attempting to undermine Pakistan’s close relations with Saudi Arabia, declaring that his government would “break any hand” threatening ties between the two nations.
Sharif’s statement appeared to reference recent remarks by Imran Khan’s wife, Bushra Bibi, who in a rare public message on Thursday assured state institutions that her jailed husband would not seek revenge against political opponents if he returned to power.
She also made remarks in her video message that were widely viewed as implying that the Saudi government had opposed Khan when he was prime minister from 2018-22.
“Such venom-spitting is an unforgivable crime,” Sharif said while addressing a ceremony on Friday. “I, as the prime minister of Pakistan, want to announce that the nation will break any hand trying to undermine the Pakistan-Saudi friendship.”
“This is not a joke,” he continued. “The allegation is beyond understanding. The biggest national interest is being slaughtered to serve the short-term political interest.”
He criticized the former first lady, whose husband’s PTI party is currently in opposition, saying that the Kingdom had never demanded anything in return from Pakistan for extending economic and diplomatic support but instead always “opened its doors.”
“I think there can be no greater enmity against Pakistan than this [issuing such comments],” he said, adding that Khan’s Pakistan Tehreek-e-Insaf (PTI) party was sacrificing the country’s interest for its political interests.
Sharif said “no one will be allowed to play” with Pakistan’s interests when it concerned “brotherly allies” such as Saudi Arabia.
Earlier, Defense Minister Khawaja Asif also addressed the issue in a press conference, highlighting that over 2.8 million Pakistanis were working in the Kingdom, sending billions of dollars in remittances back to their country every year.
“Our cordial and friendly relationship with Saudi Arabia should not be affected due to someone’s political gains,” he said. “Such a controversial statement is an effort to save PTI’s sinking ship.”
Khan was ousted from the prime minister’s office in a parliamentary vote of no-confidence in 2022, alleging that he was removed by his political rivals and the all-powerful military at the behest of the United States. All three parties deny the accusation.
The cricketer-turned-politician has been in prison since August last year, facing a slew of legal challenges. He denies any wrongdoing, claiming that all cases against him are politically motivated to keep him in jail.
His PTI party is set to kick off a “long march” to stage a protest in Islamabad on Nov. 24, aiming to pressure the government into releasing Khan from prison. Authorities have refused to grant permission to hold the gathering and imposed a ban on public assembly in the capital for two months.
Pakistani stocks break psychological 99,000 barrier on optimism over rates, reserves
- An analyst attributes the intraday rally to broad-based gains across most economic sectors
- The stock market has remained bullish since the government slashed policy rate in November
ISLAMABAD: The Pakistan Stock Exchange (PSX) on Friday breached a major psychological barrier, surging past 99,000 points during intra-day trading before settling at 97,798.23, as analysts attributed the rally to investor optimism driven by falling lending rates and higher foreign exchange reserves.
The benchmark KSE-100 index climbed 2,057.40 points by 11:10 am, reaching 99,385.79 points from the previous close. However, the index closed at 97,798.23, marking an increase of 469.84 points or 0.48 percent.
Analyst Ahsan Mehanti of Arif Habib Corporation said bank levies on large deposits, surging global oil prices, and rupee stability were fueling investor optimism.
“Stocks remained bullish, led by scrips across the board, as investors weighed falling lending rates and the imposition of bank levies on large deposits following a drop in government bond yields,” he told Arab News. “Surging global crude oil prices, rupee stability, and higher forex reserves played a catalytic role in the record surge at the PSX.”
Last month, Pakistan’s external current account recorded a surplus of $349 million, marking the third consecutive month of surplus and the highest in this period. The current account reflects a nation’s transactions with the world, encompassing net trade in goods and services, net earnings on cross-border investments and net transfer payments.
A surplus indicates that a country is exporting more than it is importing, thereby strengthening its foreign exchange reserves.
A bullish trend has been observed in the stock market since Pakistan’s central bank cut its key policy rate by 250 basis points, bringing it to 15 percent earlier this month. Economic indicators have also steadily improved since securing a 37-month, $7 billion bailout from the International Monetary Fund (IMF) in September.
In the past, the country faced a prolonged economic crisis that drained its foreign exchange reserves and saw its currency weaken amid double-digit inflation. Last year, Pakistan narrowly avoided a sovereign default by clinching a last-minute $3 billion IMF bailout deal.
US vows to be ‘steadfast partner’ after deadly attack in Pakistan’s Kurram district
- American diplomatic mission says Pakistanis deserve to live free from harm, danger and threat
- It offers condolences to victims’ families after 41 people were killed by unknown gunmen this week
KARACHI: The United States on Friday condemned a deadly attack in Pakistan’s Kurram district that killed 41 people this week, reaffirming its commitment to stand with Pakistan in ensuring the safety of its citizens against such militant attacks.
Unidentified gunmen targeted vehicles carrying Shiite community members in the Kurram district of Khyber Pakhtunkhwa province on Thursday, in one of the deadliest sectarian attacks in recent years. The assault, which also left many critically injured, occurred in a region already plagued by deadly clashes in recent months.
“The United States will remain a steadfast partner as Pakistan works to ensure the safety and security of all its citizens,” Jonathan Lalley, the spokesperson of the US diplomatic mission in Pakistan, said in a statement. “We stand in solidarity with Pakistan and the people of Khyber Pakhtunkhwa in this difficult time.”
Lalley expressed condolences to the victims’ families and called for a full recovery for the injured.
“The Pakistani people deserve to live free from harm, danger, and threat, and to feel protected and secure in their daily lives,” he added.
No group has claimed responsibility for the attack, which followed the reopening of a key highway in the region after it was closed for weeks due to sectarian violence.
Kurram, a volatile district near the Afghan border, has been a flashpoint for sectarian clashes between Sunni and Shiite communities, adding to the challenges of maintaining security in the area.
The US-Pakistan forged a counterterrorism partnership in the aftermath of the September 11, 2001, attacks, to address regional security challenges. Over the years, however, the relationship faced friction, while the US-led international forces were in Afghanistan.
Despite the tensions, both countries reaffirmed their commitment to security cooperation and counterterrorism efforts, especially in the wake of the US military withdrawal from Afghanistan in 2021.
The commitment to security partnership reflects a shared goal of combating extremism and ensuring regional stability.
Pakistan, Malaysia agree to enhance military cooperation with focus on air force training
- Malaysian air chief praises PAF’s advancements in indigenization on his first Pakistan visit
- His Pakistani counterpart reaffirms commitment to training Malaysian Air Force personnel
ISLAMABAD: Pakistan and Malaysia have agreed to deepen bilateral military cooperation, with a particular emphasis on joint training and air power collaboration, Pakistan’s military said on Friday.
The understanding was reached during a meeting between Pakistan Air Force (PAF) Chief Air Chief Marshal Zaheer Ahmed Baber Sidhu and Royal Malaysian Air Force Chief General Tan Sri Dato’ Sri Mohd Asghar Khan bin Goriman Khan at Air Headquarters in Islamabad.
“The [Pakistan] Air Chief reaffirmed his commitment to enhancing military partnership between the two Air Forces through joint training initiatives, particularly within the realm of air power,” the Inter-Services Public Relations (ISPR) said in a statement. “These initiatives will encompass provisioning of both basic and tactical level training for personnel of the Malaysian Air Force.”
The Malaysian air chief, making his first visit to Pakistan, praised the PAF’s advancements in indigenization and technological innovation. He also expressed interest in bolstering ties through enhanced collaboration in training, maintenance and operational excellence.
The meeting included discussions on defense cooperation, joint exercises and technology sharing, ISPR said, highlighting the robust defense relationship between the two nations.
During his visit, the Malaysian official toured the National Aerospace Science & Technology Park Silicon and the PAF Cyber Command, where he was briefed on Pakistan’s advanced operational capabilities.
He also lauded the innovative projects displayed at the ongoing International Defense Exhibition IDEAS-2024 in Karachi.
Earlier, the Malaysian air chief was presented with a guard of honor upon his arrival, ISPR added.
Pakistan government doubles down on preventing Imran Khan’s Nov. 24 protest
- Interior Minister Mohsin Naqvi warns no talks if Khan’s PTI proceeds with the protest
- Ex-premier’s party plans a ‘long march’ to Islamabad, seeking his release from prison
ISLAMABAD: Pakistan’s Interior Minister Mohsin Naqvi on Friday vowed to implement the Islamabad High Court’s (IHC) order, refusing to allow former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party to stage the Nov. 24 protest in the federal capital demanding his release.
The PTI has announced a “long march” to Islamabad, primarily to pressurize the government to end Khan’s imprisoned that has lasted for over a year on what his party contends are politically motivated charges. The protest also aims to raise PTI’s voice against alleged rigging in the February 8 general elections while calling for measures to ensure judicial independence, which the party says has been undermined by the 26th constitutional amendment.
Only a day earlier, the IHC directed the government to form a committee to engage in talks with the PTI, emphasizing the need to avoid disruptions during the three-day visit of Belarusian President Aleksandr Lukashenko to discuss bilateral economic cooperation. The court expressed hope that the PTI would allow “meaningful communication” with the administration while acknowledging that the maintenance of law and order would be the government’s priority if there was no breakthrough between the two sides.
Addressing the media in Islamabad alongside the capital city’s chief commissioner and police chief, the interior minister highlighted that no rally, march or protest would be allowed in the federal capital owing to the Belarusian president’s visit to the country, as per the IHC order.
“No one will be allowed to stage a rally or protest in Islamabad in compliance with the high court order,” Naqvi said. “After the IHC order, we will implement it 100 percent at any cost. We are bound by the law to implement it.”
Regarding the IHC directions to hold talks with the PTI party leadership, the minister said he would speak to Prime Minister Shehbaz Sharif in the evening to constitute a committee “but definitely if they stage a protest, this [negotiation] will get difficult.”
Islamabad’s district magistrate has already imposed a two-month ban on the gathering of more than five people in the capital using Section 144 of the Criminal Procedure Code (CrPC), which allows the government to prohibit various forms of political assembly, gatherings, sit-ins, rallies, demonstrations and other activities for a specified period.
In response to a question about whether the government was in touch with Adiala Jail, where ex-premier Khan is currently incarcerated, Naqvi said he has no contact with anyone there.
The interior minister also highlighted that the capital city’s administration did not receive any application from the PTI to stage a protest.
He made it clear that people violating the court orders would be responsible if there was any loss of life during the Nov. 24 protest.
Naqvi also said that he agreed with the residents of Islamabad that shops, roads, businesses and mobile signals should not be shut down but noted there was no other way of dealing with such protests.
“If they want to come and protest [in Islamabad], I’ll be the one who will say that no talks should take place,” he concluded. “If they want to hold talks, they should do it in a proper manner. This is no way that on one side they protest and on the other call for talks.”
Earlier this week, Pakistan’s interior ministry had authorized the deployment of paramilitary Punjab Rangers and Frontier Corps troops in Islamabad to maintain law and order.
Pakistan’s parliament also passed a law earlier this year to regulate public gatherings in Islamabad, specifying timings for rallies and designating specific areas. The law prescribes three-year jail terms for participants in illegal assemblies and 10-year imprisonment for repeat offenders.
