Rising pressures on macroeconomic stability highlighted

KARACHI: Atif Ikram Sheikh, the president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has sounded the alarm over the growing threat volatile global oil markets pose to Pakistan's economic stability. Sheikh warned that repeating international oil shocks, combined with heavy domestic taxes, are damaging Pakistan's export competitiveness, expanding the trade deficit, and risking industrial shutdowns.

He explained that rising diesel and furnace oil prices are making it harder to manage inland transportation, power generation costs, and manufacturing expenses, putting flagship export industries at risk against regional rivals. Sheikh stressed the urgent need for a specific safety net for exporters to stop mass de-industrialization, arguing that the full impact of escalating oil prices on the industrial sector would be untenable.

He noted that the increasing freight and transportation costs are chipping away at the thin profit margins exporters need to secure global orders. Sheikh proposed a comprehensive plan, including suspending the Petroleum Development Levy (PDL) for export-focused manufacturing to give exporters a financial cushion and preserve foreign exchange earnings.

He also called for a quick transition to renewable energy sources and lowering energy tariffs to make Pakistan's electricity and gas prices more competitive with neighboring nations like Bangladesh, Vietnam, and India. Sheikh urged a sharp reduction in the central bank's high policy rate to help industrial production stay afloat.

He warned that small and medium-sized enterprises (SMEs), the backbone of the export supply chain, are particularly vulnerable and facing a liquidity crisis as their operational costs rise. Without immediate action, factory closures, job cuts, and widespread unemployment would follow.