Strikes, road closures may cause Rs120bn daily economic loss: Aurangzeb

By Federal Minister for Finance and Revenue Muhammad Aurangzeb has warned that strikes, sit-ins, long marches and road closures could cause economic losses of around Rs120 billion per day by disrupting commercial activity. He said the estimated daily loss included around Rs86 billion in the services sector, Rs25 billion in industry and Rs9 billion in agriculture. Aurangzeb said disruptions could affect construction, finished goods, raw materials and supply chains, while the agriculture sector could face losses due to disruptions to transportation, perishable goods, dairy supply chains and agricultural trade. He said the immediate burden of economic disruption would fall on ordinary people, daily-wage workers, small shopkeepers and small businesses. The minister said Pakistan's economic journey was moving from stability towards growth, with foreign exchange reserves reaching $21.4 billion and the fiscal deficit declining to a 22-year low of 2.6% of GDP. He said higher tax revenues and lower expenditure had helped reduce the fiscal deficit, while the current account had moved into surplus after 14 years. The minister said the current account remained broadly balanced during the last fiscal year and the trend continued during the first two months of the current fiscal year. He said remittances continued to improve, while IT exports were expected to rise from $4.6 billion to $5.5 billion. Goods exports had also started improving, helping keep the current account deficit between zero and 1% of GDP, he added. Aurangzeb said GDP growth stood at 3.7% during the last fiscal year and was expected to exceed 4% during the current year. He said large-scale manufacturing had shown significant recovery, with growth recorded on both monthly and annual bases in July and August. The minister said investor participation in the stock market, particularly among young people, had increased. Pakistan witnessed 11 IPOs last year, while five IPOs had taken place during the first two months of the current fiscal year. He said the increase in IPOs reflected business expansion, establishment of new units and improving business and investment confidence. Aurangzeb said the Middle East and Gulf situation posed major challenges to global trade, with supply-chain disruptions and higher freight and insurance costs affecting international commerce. He said the recent wave of terrorism and loss of precious human lives was a major setback, adding that the Pakistan Army and civil armed forces were fully engaged in countering terrorism. The minister said the country needed to continue its journey from economic stability towards sustainable growth, exports and investment. He said goods exports had been set a target of $32.9 billion for the current fiscal year, with an expected growth of around 6%. The average daily volume of goods exports was around $90 million, he said, warning that further economic disruptions could significantly affect exports and economic growth. Aurangzeb said the situation in the Strait of Hormuz and Bab el-Mandeb was already putting pressure on exporters and the business community. He said IT exports stood at around $811 million during the first two months, with a daily export volume of approximately $13 million. The minister warned that any disruption to connectivity or internet services could severely affect IT exports, which had declined by up to 80% in the worst situations in the past. Aurangzeb said foreign direct investment stood at $311 million in August and stressed the need for further improvement. He said economic stability was a basic condition for attracting foreign investment, adding that foreign investors' interest also increased after confidence among domestic investors improved. The minister called for resolving the country's issues through dialogue and consensus, stressing that the pace of economic stability and growth should not be put at risk.