The business community has prepared a three-pronged strategy aimed at strengthening the economy and accelerating growth. Reacting to the plunge of the Pakistan Stock Exchange, Lahore Chamber of Commerce and Industry (LCCI) President Mian Nauman Kabir, in a statement on Friday, assured businessmen that the slump was temporary and the market’s recovery would begin soon.
He urged investors not to panic over the situation. Speaking along with Kabir, LCCI Senior Vice President Rehman Aziz Chan and Vice President Haris Ateeq stated that the stock market of any country was an important indicator of economic scenario. Referring to the 2,134-point (nearly 4.7%) slump at the bourse on Thursday, they highlighted that it was the largest fall since March 2020 and the drop would impact the global perception of Pakistan as a businessfriendly economy.
“Increase in trade deficit, hike in policy rate and surge in inflation have primarily fuelled the stock market’s fall,” they said, adding that the ballooning trade deficit needed urgent attention of the government. In the first five months of current fiscal year (JulyNovember 2021), trade deficit jumped to around $20.5 billion, which was 111% higher than the same period of last year. “The swelling trade deficit is playing a major role in the persistent depreciation of the rupee,” they said.
They recommended that the government should curtail imports of non-essential and luxury goods, implement a currency swap arrangement with China, focus on a concrete strategy of import substitution and export growth. They pointed out that the currency swap scheme could be implemented for $13 billion worth of bilateral trade with China. “There is a need to diversify exports of pharmaceutical products, engineering goods and halal food,” the LCCI office-bearers said.
“To enhance our exports to the untapped markets like Africa, Russia and Central Asia, the government should establish formal banking channels on a priority basis.” They pointed out that the inflation rate for November stood at around 11.5%, adding that the main reasons behind the increase were exchange rate depreciation, increase in global crude oil prices, over-reliance on imported commodities and hike in electricity tariff.
The business leaders recommended to the country’s leadership to increase energy production through renewable sources to curb inflation in the country. “Price control mechanism needs to be strengthened to control food inflation,” they said. “Strict and indiscriminate action should be taken against all those involved in profiteering and hoarding.”