Business

Finance ministry sees improved economic indicators despite sustained inflation

Published

6 months ago

December 4, 2023

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Finance ministry sees improved economic indicators despite sustained inflation

The Ministry Finance says the interest rates were maintained at 22 per cent, owing to the significant performance of high-frequency indicators and improved inflation outlook – although the consumer price index (CPI) negates the claim as an overwhelming majority in Pakistan are facing an unprecedented cost-of-living crisis.

Overall, positive economic signals and recovery indicators are steering the improvement in the GDP outlook for the fiscal year, says the ministry in its Monthly Economic Update and Outlook for November while relying on the data from October.

“The government expects remittances to recover in Oct 2023, as spreads between the interbank and open market have reduced below 1pc. However, global inflation has impacted the disposable incomes of overseas workers, resulting slowdown across the board, particularly Bangladesh, India, and the Philippines.”

About the effects of high interest rates and payments, it says, “Despite better fiscal accounts during the first quarter of the current fiscal year, higher mark-up payments may put significant pressure on the expenditure side.”

It also mentions the negative impacts of high interest rates globally. “The impact of tighter monetary policy is becoming increasingly visible, business and consumer confidence have turned down, and the rebound in China has faded. However, in the near term, government’s fiscal expansion should help the country achieve its 5.0pc growth target for 2023.”

“Global GDP growth is projected to remain sub-par in 2023 and 2024, at 3.0pc and 2.7pc respectively, held back by the macroeconomic policy tightening needed to rein in inflation.”

It says that the CPI inflation was recorded at 26.9pc on year-on-year basis in October 2023 as compared to 26.6pc in October 2022 whereas it increased to 31.4pc in the previous month.

The ministry also admits the higher inflation during the first months of the current fiscal year as the CPI stood at 28.5pc against 25.5pc in the same period last year. On a month-on-month month, it increased to 1.1pc in October 2023 compared to an increase of 2.0pc in the previous month.

Major drivers contributing to this trend, the report says, are: alcoholic beverages and tobacco (84.6pc); furnishing and household equipment maintenance (37.1pc); non-perishable food items (33.0pc); transport (31.3pc); housing, water, electricity, gas and fuel (20.5pc); health (25.2pc), clothing and footwear (20.6pc) and perishable food items (1.9pc).

Talking about the external factors, the report reads, “High-frequency activity indicators across the largest economies present a mixed picture, but on balance signal a loss of momentum in the second half of 2023. Labour markets generally remain tight, with unemployment rates at or near multi-year low level.”

“During the second half of 2023, declines in headline inflation are now helping to improve household real disposable incomes, but real wage losses over the past two years and tighter financial conditions continue to restrain consumer spending in most advanced economies, with the US a notable exception. Industrial production has continued to stagnate in many economies, despite some signs of an upturn in tech-related activity.”

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

1 day ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

1 day ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

1 day ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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