Latest news with #LSM
Business Recorder
a day ago
- Business
- Business Recorder
Why such an exodus?
EDITORIAL: Another month, another record. Nearly 60,000 Pakistanis left the country in May to look for work abroad — up 12.7 percent from April — bringing the tally for the first five months of the year to over 285,000. The government, meanwhile, is trumpeting GDP growth, moderating inflation, and a current account surplus. But here's the problem: if the economic outlook is indeed improving, then why are so many people still packing their bags? There's no mystery to this outflow. These aren't high-flying bankers and Silicon Valley engineers looking for tax arbitrage or better schools. These are skilled, semi-skilled, and unskilled workers — many of them trained and subsidised by the state — who no longer believe they can earn a dignified living in their own country. Punjab accounts for over half the out-migration, and the Gulf remains the primary destination. That doesn't exactly signal confidence in domestic opportunity. The state is reading this trend as a win. The finance ministry happily links it to the remittance surge — up 28.8 percent year-on-year to US$34.9 billion — and sees the inflow as a stabilising factor for the external account. But there's no serious attempt to quantify the loss of trained labour, the fiscal leakage from subsidised education, or the impact on productivity, innovation, and institutional memory. Brain drain, even when disguised as economic migration, bleeds a country in ways no remittance can plug. It's especially alarming because this exodus is happening against a backdrop of celebrated economic indicators. Inflation has slowed to 3.5 percent, the rupee is stable, and the State Bank has held rates at 11 percent. The current account has flipped into a US$1.8 billion surplus. On paper, it's a neat macro story. But it only holds if one ignores the micro realities — like the fact that 44 percent of Pakistan's population still lives below the poverty line. No serious recovery narrative can afford to miss that point. There's also something disjointed about the state's messaging. One day it's pushing digitalisation, tax reform, climate action, and 'job creation.' The next, it's quietly watching half a million people leave the country every year because they can't find meaningful work. The poor are still poor, and the struggling middle class is shrinking. If this is the start of a boom cycle, then it's one that's unfolding without its people. Even the 2.7 percent GDP growth figure — contested by independent economists and still awaiting scrutiny by a promised expert committee — doesn't inspire much confidence. Manufacturing remains flat, agriculture is heavily reliant on cotton output projections, and services are under pressure from weak domestic demand. If LSM needs to grow over 8 percent in the final two months just to make the math work, the real question is whether we're building a recovery or back-calculating one. The structural issues remain unaddressed. Energy pricing reform, privatisation, and revenue mobilisation are all still on the table, not in the ledger. The emphasis on macro stability, while necessary, has crowded out the urgency of inclusive growth. Migration should not be the only safety valve for economic stress. Nor should it be used to plaster over a failed jobs policy. Long term, the country is setting itself up for a hollowed-out workforce and a weaker social fabric. When the most driven, educated, and technically capable choose to leave, what does that say about the economy they're leaving behind? And who will be left to pay the taxes, staff the hospitals, build the infrastructure, and teach the next generation? This is not a recovery. It's a rotation — of people, problems, and narratives. And if the government continues to conflate temporary balance sheet relief without structural correction, it will miss the bigger picture entirely. A stable currency doesn't mean a stable society. Low inflation doesn't mean high living standards. A surplus on paper doesn't mean a surplus of opportunity. What it means, right now, is that nearly 285,000 people voted with their feet. That should worry anyone who's still here. Copyright Business Recorder, 2025
Fibre2Fashion
2 days ago
- Business
- Fibre2Fashion
Bangladesh's large industries grow at 4.15% YoY in Apr; RMG dips
Bangladesh's large industries posted an annualised 4.15-per cent growth in April this year, though the largest export-earning apparel industry was a little downbeat, the Bangladesh Bureau of Statistics (BBS) said recently. Latest BBS data show the quantum index of large-scale manufacturing (LSM) rose to 182.12 in April from 174.87 in the same month last year. The growth was broad-based, with 19 out of 23 major industrial sectors contributing positively. However, four key sectors—readymade garments (RMG), food products, plastic and rubber goods, and chemicals—witnessed a decline, partially weighing on the overall momentum in the economy. Bangladesh's large industries posted an annualised 4.15-per cent growth in April this year, though the apparel industry, which holds the largest weight of 61 per cent in the quantum index of large-scale manufacturing, contracted by 0.25 per cent during the month. The textile sector, which carries the second-highest weight in the index, expanded by 5.34 per cent in the month. The apparel sector, which holds the largest weight of 61 per cent in the index, contracted by 0.25 per cent during the month. Though the decline was less than 1 per cent, its sheer size makes it a pivotal driver of overall manufacturing performance, a domestic media outlet reported. The textile sector, which carries the second-highest weight in the index, expanded by 5.34 per cent in the month. Some attributed a seasonal slowdown in RMG orders to the sector's decline. Fibre2Fashion News Desk (DS)
Business Recorder
01-07-2025
- Business
- Business Recorder
Pakistan's real GDP grows 2.68% in FY25
ISLAMABAD: Real GDP grew by 2.68 percent in fiscal year 2025, while inflation eased steadily, which is expected to remain within the range of 3-4 percent for June 2025, said Finance Division. The Division in its monthly 'Economic update and outlook June 2025' stated that cumulatively, Large Scale Manufacturing (LSM) declined by 1.5 percent during July-April fiscal year 2025, in contrast to a marginal growth of 0.3 percent recorded in the comparable period of last year. LSM showed a mixed performance in April 2025, registering a year on year (YoY) growth of 2.3 percent while contracting by 3.2 percent month-on-month (MoM) basis. The outlook for LSM in the coming months appears positive, supported by encouraging trends in high-frequency indicators such as cement dispatches and automobile sales. Fitch upgrades Pakistan's rating: macroeconomic stabilisation acknowledged It further stated that the country's economy continued growth momentum in fiscal year 2025, supported by strengthened macroeconomic fundamentals, prudent fiscal management, and improved external sector performance. Current account recorded a surplus of $1.81 billion, the fiscal deficit declined, and the primary surplus reached 3.2 percent of GDP in July-April fiscal year 2025. The ongoing International Monetary Fund (IMF) programs (Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), along with upgraded credit ratings, bolstered policy credibility and investor's sentiment. The government remains committed to structural reforms focused on tax harmonization, energy pricing, and privatization, while also advancing climate action through dedicated initiatives to lay the foundation for inclusive and sustainable growth, it added. The uptake in loans to private sector businesses suggests rising production activities and improved investor confidence. On the external front, higher remittances and exports will continue to keep the current account in surplus for fiscal year 2025. The report did not include information about public sector development program (PSDP) releases. Credit flow to private sector registered Rs676.6 billion during July 1 to June 13, fiscal year 2025 against Rs323.5 billion in the comparable period of last year. In May 2025, YoY Consumer Price Index (CPI) inflation recorded at 3.5 percent, compared to 11.8 percent in May 2024. MoM, it has declined by 0.2 percent, following a 0.8 percent decrease in April and a 3.2 percent decline in May 2024. For the Kharif season 2025-26, the federal government has set targets of 2.2 million hectares for cotton cultivation area and 10.18 million bales for production. During July-April 2025, agricultural credit disbursement reached Rs 2,066.6 billion, an increase of 15.7 percent, moving steadily toward the annual target of Rs 2,572.3 billion. During July-April 2025, the increase in revenues outpaced the growth in expenditures, showing the effectiveness of ongoing consolidation efforts. Net federal receipts grew by 44.4 percent to Rs 8,124.2 billion during July-April 2025 from Rs 5,627.5 billion last year. The rise in revenues is primarily contributed by 68.1 percent growth in non-tax collections. Further, tax collection witnessed a significant increase, as in July-May fiscal year 2025, it grew by 25.9 percent to Rs 10,233.9 billion from Rs 8,125.7 billion last year. The increase is attributed to a 33.8 percent increase in FED, followed by a 27.0 percent increase in direct tax, a 26.5 percent increase in sales tax, and a 16.3 percent increase in customs. Total expenditure increased by 18.5 percent to Rs 12,948.3 billion during July-April fiscal year 2025 compared to Rs 10,922.5 billion last year. This growth in expenditure is driven by a significant increase in development spending, relative to moderate growth in current expenditures. Current spending grew by 17.8 percent, while PSDP expenditure increased by 40.6 percent. Overall, the fiscal deficit reduced to 3.2 percent of GDP during July-April 2025 from 4.5 percent last year. While primary surplus increased to Rs 3,648.9 billion (3.2 percent of GDP) during July-April 2025 from Rs 1,611.5 billion (1.5 percent of GDP) last year. With ongoing efforts, the fiscal deficit is expected to stay well below the level observed last year. The external account position continued to improve during July-May fiscal year 2025 on account of rising remittances and exports. The current account posted a $1.8 billion surplus, reversing the deficit of $1.6 billion last year. Goods exports rose 4 percent to $29.7 billion, while imports increased 11.5 percent to $54.1 billion, widening the trade deficit to $24.4 billion from $20.0 billion last year. Gains in key exports were observed in knitwear (14.5 per cent), garments (16.4 per cent), and bedwear (10.6 per cent). Increases in major imports were recorded in palm oil (26.3 per cent), electrical machinery (13.6 per cent), while crude oil imports decreased (1.7 per cent). Service exports grew 8.5 percent to $7.6 billion; imports rose 6.6 percent to $10.3 billion, resulting in a service trade deficit of $2.7 billion. IT exports increased by 18.7 percent to $3.5 billion. Remittances reached $34.9 billion, up 28.8 percent from $27.1 billion, led by inflows from Saudi Arabia (24.4 per cent share) and UAE (20.4 per cent). Net FDI recorded at $2.0 billion compared to $2.1 billion last year. Financial services sector attracted the highest FDI ($628.9 million), followed by power ($562.8 million), and oil & gas exploration ($265.6 million) attracted the most FDI. However, Foreign Portfolio Investment, private and public, recorded net outflows of $312.5 million and $311.9 million, respectively. As of June 13th, 2025, foreign exchange reserves stood at $17.0 billion, including $11.7 billion with the State Bank of Pakistan. The Monetary Policy Committee (MPC), in its meeting held on June 16, 2025, decided to maintain the policy rate at 11 percent, citing potential inflation risks, along with external imbalances and regional uncertainties. The MPC noted that while YoY inflation in May stood at 3.5 percent, it is expected to remain within the range of 5.0 to 7.0 percent in fiscal year 2026. During July 1stMay 30th fiscal year 2025, broad money (M2) grew by 6.3 percent, compared to 9.5 percent last year. This expansion was primarily driven by a sharp increase in Net Foreign Assets (Rs 1,279.2 billion compared to Rs 480.6 billion last year), while growth in Net Domestic Assets moderated to Rs 982.7 billion from Rs 2,460.3 billion a year earlier. Private sector credit demonstrated significant expansion, rising to Rs 831.8 billion, more than double the Rs 351 billion recorded in the corresponding period last year. In May 2025, the KSE-100 index performed well, gained 8,365 points and closed at 119,691 points at month end. Similarly, the market capitalization of PSX increased by Rs 982billion to close at Rs 14,503 billion. In May 2025, the Bureau of Emigration & Overseas Employment registered 59,995 workers, a 12.7 percent increase from 53,231 in April. The Pakistan Poverty Alleviation Fund, in partnership with 24 organizations, disbursed 18,525 interest-free loans worth Rs 894 million in May 2025. Since 2019, a total of 3.01 million loans amounting to Rs 117.61 billion have been provided. During July-April fiscal year 2025, Rs 411.56 billion was spent under the BISP, representing a 29 percent increase compared to last year, against an allocation of Rs 592.5 billion. Copyright Business Recorder, 2025
Business Recorder
01-07-2025
- Business
- Business Recorder
Tax structure: budget envisages no reform
EDITORIAL: The major revisions in the Finance Act 2025 must be supported as they attempt to reduce the import taxes on key raw materials and intermediate goods, with the government claiming its intent was to create a business-friendly import environment (with an associated positive impact on growth) while inexplicably extending 50 tax exemptions that cannot be supported in the current year considering that the economy remains extremely fragile, reflected partly by the failure of the government to clear its contractual obligations to Independent Power Producers set up under the China Pakistan Economic Corridor, and continued high dependence on foreign loans (nearly 20 billion dollars) from not only multilaterals but also from the three friendly countries. The business-friendly revisions include zero tariffs applicable on 2201 tariff lines to be extended to an additional 916 lines and reduction of customs codes on 2624 PTC codes. At the outset it is relevant to note that phasing out import taxes has been a long-standing loan condition by multilaterals and this particular amendment to the Finance Act is unlikely to be challenged by the International Monetary Fund (IMF) staff whose approval is critical to the success of the second staff-level review followed by tranche disbursement. However, it has not yet been clarified as to how much of the budgeted collections by the Federal Board of Revenue (FBR) would be negatively impacted by these measures. This shortfall in budgeted revenue collection would, one may safely assume, generate the need to impose additional taxes (mini-budget) later in the year as part of the contingency measures agreed with the IMF staff under the ongoing Extended Fund Facility (EFF) programme. Without Fund approval pledged external assistance releases would not be forthcoming to stave off the still looming threat of default. This stands to reason as both the Finance Minister and the Chairman FBR have publicly stated that in the event that the 389 billion rupees budgeted under enforcement measures is not realised there would be a need to impose additional taxes though the amount noted by the two men has varied between 400 and 600 billion rupees. There is no doubt that the investment climate in the country needs pro-business measures as the large-scale manufacturing sector (LSM) continues to show an increase in negative growth — negative 1.47 percent July-March 2024-2025 against 0.92 percent 2023-24. This deterioration is in spite of the discount rate being slashed from 22 percent to 11 percent (June 2024 to June 2025) and a decline in electricity tariffs though captive power plants will now be taxed, again an IMF condition. The draconian measures that consist of enhancing the powers of the FBR officials, slightly watered down by parliament, may further compromise productivity in the LSM sector. Be that as it may, successive Pakistani governments have relied on monetary and fiscal incentives to industry though as per the EFF documents uploaded on the Fund website in October 2024, 'The government's intervention in price setting, including for agricultural commodities, fuel products, power, and gas (biannual), combined with high tariff and non-tariff protection tilted the playing field in favour of selected groups or sectors. Despite all this support, the business sector has failed to become an engine of growth, and the incentives eventually weakened competition and trapped resources in chronically inefficient (including perpetually 'infant') industries.' In marked contrast to the reduction in import tariffs, exemptions are vigorously opposed by multilaterals as they are largely, if not entirely, supportive of the rich and influential. It is fairly evident that exemptions on the pension of Pakistani presidents falls in the category of benefiting the rich and the influential and is not justified, especially given the economy's fragility. The most disappointing aspect of the budget 2025-26 is the fact that there have been no reforms in the tax structure and the reliance on indirect taxes, whose incidence on the poor is greater than on the rich, remaining intact as they are easy to collect. Direct taxes based on the ability to pay principal continue to consist of withholding taxes in the sales tax mode (which are indirect taxes) comprising of 75 percent of total collections. Copyright Business Recorder, 2025
Business Recorder
01-07-2025
- Business
- Business Recorder
Monthly update by FD: FY25: real GDP grows 2.68pc
ISLAMABAD: Real GDP grew by 2.68 percent in fiscal year 2025, while inflation eased steadily, which is expected to remain within the range of 3-4 percent for June 2025, said Finance Division. The Division in its monthly 'Economic update and outlook June 2025' stated that cumulatively, Large Scale Manufacturing (LSM) declined by 1.5 percent during July-April fiscal year 2025, in contrast to a marginal growth of 0.3 percent recorded in the comparable period of last year. LSM showed a mixed performance in April 2025, registering a year on year (YoY) growth of 2.3 percent while contracting by 3.2 percent month-on-month (MoM) basis. The outlook for LSM in the coming months appears positive, supported by encouraging trends in high-frequency indicators such as cement dispatches and automobile sales. Fitch upgrades Pakistan's rating: macroeconomic stabilisation acknowledged It further stated that the country's economy continued growth momentum in fiscal year 2025, supported by strengthened macroeconomic fundamentals, prudent fiscal management, and improved external sector performance. Current account recorded a surplus of $1.81 billion, the fiscal deficit declined, and the primary surplus reached 3.2 percent of GDP in July-April fiscal year 2025. The ongoing International Monetary Fund (IMF) programs (Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), along with upgraded credit ratings, bolstered policy credibility and investor's sentiment. The government remains committed to structural reforms focused on tax harmonization, energy pricing, and privatization, while also advancing climate action through dedicated initiatives to lay the foundation for inclusive and sustainable growth, it added. The uptake in loans to private sector businesses suggests rising production activities and improved investor confidence. On the external front, higher remittances and exports will continue to keep the current account in surplus for fiscal year 2025. The report did not include information about public sector development program (PSDP) releases. Credit flow to private sector registered Rs676.6 billion during July 1 to June 13, fiscal year 2025 against Rs323.5 billion in the comparable period of last year. In May 2025, YoY Consumer Price Index (CPI) inflation recorded at 3.5 percent, compared to 11.8 percent in May 2024. MoM, it has declined by 0.2 percent, following a 0.8 percent decrease in April and a 3.2 percent decline in May 2024. For the Kharif season 2025-26, the federal government has set targets of 2.2 million hectares for cotton cultivation area and 10.18 million bales for production. During July-April 2025, agricultural credit disbursement reached Rs 2,066.6 billion, an increase of 15.7 percent, moving steadily toward the annual target of Rs 2,572.3 billion. During July-April 2025, the increase in revenues outpaced the growth in expenditures, showing the effectiveness of ongoing consolidation efforts. Net federal receipts grew by 44.4 percent to Rs 8,124.2 billion during July-April 2025 from Rs 5,627.5 billion last year. The rise in revenues is primarily contributed by 68.1 percent growth in non-tax collections. Further, tax collection witnessed a significant increase, as in July-May fiscal year 2025, it grew by 25.9 percent to Rs 10,233.9 billion from Rs 8,125.7 billion last year. The increase is attributed to a 33.8 percent increase in FED, followed by a 27.0 percent increase in direct tax, a 26.5 percent increase in sales tax, and a 16.3 percent increase in customs. Total expenditure increased by 18.5 percent to Rs 12,948.3 billion during July-April fiscal year 2025 compared to Rs 10,922.5 billion last year. This growth in expenditure is driven by a significant increase in development spending, relative to moderate growth in current expenditures. Current spending grew by 17.8 percent, while PSDP expenditure increased by 40.6 percent. Overall, the fiscal deficit reduced to 3.2 percent of GDP during July-April 2025 from 4.5 percent last year. While primary surplus increased to Rs 3,648.9 billion (3.2 percent of GDP) during July-April 2025 from Rs 1,611.5 billion (1.5 percent of GDP) last year. With ongoing efforts, the fiscal deficit is expected to stay well below the level observed last year. The external account position continued to improve during July-May fiscal year 2025 on account of rising remittances and exports. The current account posted a $1.8 billion surplus, reversing the deficit of $1.6 billion last year. Goods exports rose 4 percent to $29.7 billion, while imports increased 11.5 percent to $54.1 billion, widening the trade deficit to $24.4 billion from $20.0 billion last year. Gains in key exports were observed in knitwear (14.5 per cent), garments (16.4 per cent), and bedwear (10.6 per cent). Increases in major imports were recorded in palm oil (26.3 per cent), electrical machinery (13.6 per cent), while crude oil imports decreased (1.7 per cent). Service exports grew 8.5 percent to $7.6 billion; imports rose 6.6 percent to $10.3 billion, resulting in a service trade deficit of $2.7 billion. IT exports increased by 18.7 percent to $3.5 billion. Remittances reached $34.9 billion, up 28.8 percent from $27.1 billion, led by inflows from Saudi Arabia (24.4 per cent share) and UAE (20.4 per cent). Net FDI recorded at $2.0 billion compared to $2.1 billion last year. Financial services sector attracted the highest FDI ($628.9 million), followed by power ($562.8 million), and oil & gas exploration ($265.6 million) attracted the most FDI. However, Foreign Portfolio Investment, private and public, recorded net outflows of $312.5 million and $311.9 million, respectively. As of June 13th, 2025, foreign exchange reserves stood at $17.0 billion, including $11.7 billion with the State Bank of Pakistan. The Monetary Policy Committee (MPC), in its meeting held on June 16, 2025, decided to maintain the policy rate at 11 percent, citing potential inflation risks, along with external imbalances and regional uncertainties. The MPC noted that while YoY inflation in May stood at 3.5 percent, it is expected to remain within the range of 5.0 to 7.0 percent in fiscal year 2026. During July 1stMay 30th fiscal year 2025, broad money (M2) grew by 6.3 percent, compared to 9.5 percent last year. This expansion was primarily driven by a sharp increase in Net Foreign Assets (Rs 1,279.2 billion compared to Rs 480.6 billion last year), while growth in Net Domestic Assets moderated to Rs 982.7 billion from Rs 2,460.3 billion a year earlier. Private sector credit demonstrated significant expansion, rising to Rs 831.8 billion, more than double the Rs 351 billion recorded in the corresponding period last year. In May 2025, the KSE-100 index performed well, gained 8,365 points and closed at 119,691 points at month end. Similarly, the market capitalization of PSX increased by Rs 982billion to close at Rs 14,503 billion. In May 2025, the Bureau of Emigration & Overseas Employment registered 59,995 workers, a 12.7 percent increase from 53,231 in April. The Pakistan Poverty Alleviation Fund, in partnership with 24 organizations, disbursed 18,525 interest-free loans worth Rs 894 million in May 2025. Since 2019, a total of 3.01 million loans amounting to Rs 117.61 billion have been provided. During July-April fiscal year 2025, Rs 411.56 billion was spent under the BISP, representing a 29 percent increase compared to last year, against an allocation of Rs 592.5 billion. Copyright Business Recorder, 2025
