Pakistan Daily Economy Update - 24 January

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1. Jan . 24, 2018 KCCI - eBulletin Karachi Development Package cut by PKR 16Bbn, stands at PKR 9Bn The federal government has slashed PKR 16Bn of Karachi Development Package, announced by PM Shahid Khaqan Abbasi in Aug’17, from an outlay of PKR 25Bn to PKR 9Bn. Governor Sindh Muhammad Zubair informed Mayor Waseem Akhtar that the amount curtailed would be spent on construction of a hospital under Karachi University and for development of industrial zone infrastructure. Cuts in allocation has also been made in construction of roads, underpasses, flyovers, transport, water and sewerage in Karachi. Now Nishter Road and Maghopir Road, flyovers on Sakhi Hassan, Five Star Chowrangi and KDA Chowrangi North Nazimabad are the projects left to be built. The Governor also informed that PKR 3.5Bn has been cut from PKR 5Bn allocated in the package for purchasing fire tenders, fire equipment and snorkels for KMC. Daily Times. China will never want to ‘damage industry of its special partner’ As a sign of deepening relations, Beijing has invited Pakistan to attend the China International Import Expo later this year, a move aimed at helping the country increase its exports through products exhibition. Addressing a press conference along with Commerce Minister Pervaiz Malik, Chinese Ambassador to Pakistan Yao Jing said that Beijing is willing to accommodate concerns of the country’s private sector related to terms of the FTA. Yao said China looks to Pakistan as a special partner and it would never like to damage its industry through this kind of bilateral agreement. Tribune. Trade concessions: Islamabad, Beijing have different positions on timing China and Pakistan are said to have different positions on the timing of trade concessions under phase II of FTA. Pakistan's Commerce Minister, along with Commerce Secretary, held parlays with the new Chinese Ambassador on trade concessions where they reiterated that China should grant unilateral duty concessions on at least 70 items with immediate effect but the Chinese side showed reluctance in accepting this request. Pakistan also sought trade concessions similar to those granted to ASEAN countries. However, Chinese Ambassador signaled to give more trade concessions at a time of 8th round of talks on FTA-II to be held on Feb. 7, 2018. BR. IMF give thumbs-up on reforms vital to sustained growth The IMF is expected to present encouraging views on Pakistan’s economy in its upcoming post program monitoring report, a likelihood that would augur well for external account in need of funds injection. The upcoming post program monitoring (PPM) report on Pakistan’s economic health is considered very crucial and important as this would determine the fate of future lending, especially concessional loans, from the World Bank and Asian Development Bank. The News. Pakistan has no plan to enter IMF programme Pakistan has no plan to enter the IMF programme and the current account deficit would be met through floating of bonds and papers in international markets, while loans are likely to be obtained from World Bank and the Asian Development Bank, said SBP Governor Tariq Bajwa in Senate Standing Committee briefing. In addition to this, further devaluation of rupee to the tune of PKR 2 is expected. The country needs $ 3Bn by the end of Jun’18 this year, mainly for debt retirement and some other components leading to rising current account deficit. Dawn. Cotton import: SRO on exemption of duty issued Govt. has formally issued SRO 48(1)/2018 regarding exemption of the whole of customs duty on cotton import under two categories, carded or combed and not carded or combed. The notification shall be deemed effective from Jan. 8, 2018. BR. PM assures textile exporters of resolving their problems In a meeting with PM Khaqan Abbasi, textile exporters have expressed their resolve to boost Pakistan's textile exports beyond $ 40Bn in the next five years due to the support being given by the govt. PM assured that their proposals will be considered and steps will be taken to facilitate textile exporters in consultation with all the stakeholders for export-oriented growth in the country. BR. \ Economic Indicators List of Indicators Date / Period Unit Value Change Daily 23-Jan 110.45 112.15 0.00% 0.09% Crude (MA'18) 23-Jan 23-Jan 23-Jan 23-Jan PKR PKR Pts. $ Mn $/bbl 44,907 11.50 64.75 0.02% NM** 1.63% Gold (FE'18) Gold (10g) Local 23-Jan 23-Jan $/oz PKR 1,340.6 48,685 0.52% -0.35% Silver (FE'18) Cotton(KHI)-40 kg 23-Jan 23-Jan $/oz PKR 17.01 8,038 0.21% 0.00% Kibor-6M 23-Jan % 6.21 $ Bn 19.77 0.00% WoW -1.24% Remittances 12-Jan FY18 Jul-Dec 17 $ Bn 9.74 YoY 2.51% Exports* Imports* Jul-Dec 17 Jul-Dec 17 $ Bn $ Bn 11.01 28.97 11.27% 19.11% Jul-Dec 17 Trade Balance* $ Bn -17.96 Jul-Dec 17 Current Account $ Mn -7,413 Foreign Direct Inv. $ Bn 1.38 Jul-Dec 17 Jul-Nov 17 LSM Growth* % 7.19 % 3.75 Jul-Dec 17 Avg. CPI Discount Rate % 5.75 Sep-17 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; -24.48% -59.08% -2.81% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Major Currencies 165 GBP, 23-Jan-18, 154.7 155 145 135 EUR, 23-Jan-18, 135.8 125 115 105 95 Jan-17 USD, 23-Jan-18, 110.7 Apr-17 GBP USD EUR Jul-17 Oct-17 Source: KCCI Research ; Oanda.com Quote of the Day Auto financing up 96% percent in 1QFY18 Auto financing, dominating banks' consumer portfolio, posted a hefty growth of some 96% during 1QFY18. According to SBP, lower interest rate regime and aggressive marketing by banks, has sparked consumer financing as they disbursed some PKR 18.4Bn under the head of consumer financing. Within the segment, auto financing rose to PKR 11.2Bn in 1QFY18 compared to PKR 5.7Bn in 1QFY17. BR. "I would rather have people laugh at my economies than weep for my extravagance." Non-financial corporate sector: saving-investment gap stood at PKR 3.38Tn in FY16: SBP SBP has released study on "Sources & Uses of Funds by Non-Financial Private Corporate Sector in Pakistan," for FY16. The study measures the contribution of non-financial private corporate sector to the flow of funds in the economy. The study is based on sectoral balance sheet of sector using published data of corporates’ annual reports. BR. Chart of the Day Power cost revision to benefit consumers The power tariff for all distribution companies, except K-Electric, is estimated to come down by about PKR 2.78/ per unit for a month due to lower than assumed fuel costs in Dec’17 despite low contribution from cheap hydropower. The Central Power Purchasing Agency-Guarantee (CPPA-G) has filed a petition before the Nepra for a tariff cut on behalf of the distribution companies of ex-Wapda. The CPPA-G reported to the regulator that it had charged a higher reference tariff of PKR 8.10/ per unit to consumers in the month of Dec’17 but actual fuel cost turned out to be PKR 5.32/ per unit. Therefore, there was a legal requirement to return PKR 2.78/ per unit to consumers. Dawn. Food prices fuel bulk of consumer inflation Food inflation accounted for the largest proportion in the basket of main inflation, CPI, with its weighted average share of over 34% in Dec’17 being the highest during FY18, said SBP in its report. The inflation monitor further reveals that Karachi was the cheapest city in Dec’17 compared to other capital cities of provinces recording lowest inflation of 3.1% while the highest inflation was observed in Lahore at 6.6% (year-on-year basis). Dawn. Textile exports up 8% to $ 6.6Bn in 1HFY18 Textile exports rose 8% to $ 6.64Bn in 1HFY18 as compared to $ 6.14Bn in 1HFY17 as exporters availed the government’s incentives to boost exports. Value-added sector, which accounted for more than 55% of textile exports, also experienced decent growth, fetching nearly 4Bn in exports’ revenue.PBS data showed that knitwear exports recorded a double digit rise of 13.38% to $ 1.335Bn. Export of bedwear increased 6.22% to $1.12Bn.Readymade garments exports surged 13.52% to $ 1.24Bn Exports of cotton remained flat at $ 1.06Bn. The News. Employment growth in S. Asia to remain strong Due to rapid labour force growth, South Asia is expected to account for almost 90% of the total employment growth in Asia and the Pacific, says a new report released by the International Labour Organisation (ILO). The number of employed persons are projected to grow by some 23 million between 2017 and 2019. Dawn. King Oscar II of Sweden Imports of Machinery in Comparison to Petroleum by Pakistan (1HFY13-1HFY18) 8.00 7.71 7.54 6.95 6.68 7.00 5.67 6.00 5.00 4.00 3.00 3.64 2.93 4.49 4.02 5.00 5.49 2.93 2.00 1.00 0.00 1HFY13 1HFY14 1HFY15 Machinery Imports 1HFY16 1HFY17 1HFY18 Petroleum Imports Source: KCCI Research, PBS Value in $ Bn Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk