Pakistan Daily Economy Update - 29 April

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1. Apr . 29, 2016 KCCI - eBulletin World Bank forecasts GDP growth rate at 4.5% in FY16 The World Bank has projected Pakistan’s GDP growth rate at 4.5 % for FY16, trimming the rate by 1% from the government’s target of 5.5 %. In its report titled “Pakistan Development Update: from stability to prosperity”, the bank forecasts the growth to be driven by large scale manufacturing growth of 4.0 - 4.5% and services growth of over 5%. The country’s agriculture sector, after suffering a poor cotton harvest, is expected to have slowed to between two and 2.5% for FY16 as compared to 2.9 % in FY15. The News. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank 28-Apr PKR 104.85 0.00% USD-Open MKT 28-Apr PKR 105.10 0.00% Country to achieve 5% GDP growth this year: Dar Finance minister Ishaq Dar has said that Pakistan would achieve 5% GDP growth during ongoing financial year, as all economic indicators were moving in the right direction. He made these remarks in a meeting with a 38-member delegation of consul generals, commercial counselors and commercial secretaries-designate. He said that if each one of the new trade officers could enhance the trade in their respective jurisdictions by $ 200Mn, it could result in an overall increase of $ 7.6Bn in the country's exports. The Nation. KSE-100 index FIPI 28-Apr 28-Apr Pts. $ Mn 34,504 -5.51 0.68% NM** Crude (JU'16) 28-Apr $/bbl 45.86 1.06% Gold (MY'16) 28-Apr $/oz 1,268.7 1.67% Gold (10g) Local 28-Apr PKR 42,085 0.20% Strong ties: Iqbal hails China’s investment interest Minister for Planning Development and Reform Ahsan Iqbal has stated that China has become the highest contributor to the country’s foreign direct investment portfolio. Speaking at the “Belt & Road” CPEC and Construction Cooperation Forum in Beijing, he reaffirmed Pakistan’s resolve and commitment to the $ 46Bn deal, adding that the Prime Minister was personally supervising implementation of the projects. He further said that around 10,000 MW of electricity will be added by 2018 and an additional 15,000 MW by 2025 and the govt. was building new dams, including Diamer Bhasha Dam to overcome food security. Tribune. Silver (MY'16) 28-Apr $/oz 17.57 1.70% Cotton(KHI)-40 kg 28-Apr PKR 6,002 0.00% Kibor-6M 28-Apr % 6.36% -0.01% Forex Reserves 22-Apr $ Bn 20.79 0.05% Budget 2016-17: Corporate tax to be reduced by 1% The FBR has said that corporate tax is going to be reduced by 1% in the upcoming budget 2016-17 which is presently roaming around 33%. The rate of corporate tax would be reduced by 1% every year till 2018 to fix it at 30%. The tax to GDP ratio, which is presently at 11%, would be escalated to 12% by the end of June 30, 2016. The FBR official said that there is no plan to reduce sales tax rate in coming budget and Super Tax, which generated revenue up to PKR 15Bn for Internally Displaced Persons (IDPs), would be continued in next fiscal year. BR. Remittances Jul-Mar 16 $ Bn 14.16 4.14% Exports* Jul-Mar 16 $ Bn 15.61 -12.92% Imports* Jul-Mar 16 $ Bn 32.52 -4.22% Trade Balance* Jul-Mar 16 $ Bn -16.91 -5.50% Jul-Mar 16 Jul-Mar 16 $ Mn % -1,606 2.64 18.52% Urea pricing issue lingers on, manufactures refuse to budge The govt. had proposed to reduce the urea prices by at least PKR 200 for a 50kg bag, but fertilizer companies agreed to a cut of PKR 60, which is less than the effect of a recent cut in gas tariff for the sector. The govt. asked the companies that the reduction in prices would benefit the agriculture sector and will also protect the domestic industry from competition with cheaper imports. Tribune. Current Account Avg. CPI-FY16* Apr-16 Discount Rate % 6.00 Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Two LNG plants to supply power by end of 2017 The Senate Standing Committee on Planning, Development and Reform Minister was informed that two power projects based on liquefied natural gas would start supplying 1,200 MW of electricity next year. He said that 45% of civil work had already been completed and the govt. had approved and allocated funds for the projects. Furthermore, he told the committee that 28,000 agriculture tube wells were being provided electricity at subsidized rates in Balochistan. As part of a plan, 140 solar tube well pumps are also being installed to meet irrigation needs of the province. Tribune. Setting up bank branches abroad: SBP suggests revised policy framework The State Bank of Pakistan (SBP) has suggested revision in policy for establishment of subsidiaries/opening of branches/representative offices by Pakistani banks abroad under the draft policy on Investment Abroad by Resident Pakistanis, 2016 and remittance on account of Minimum Capital Requirement of overseas Central Banks. The SBP said that the sound Pakistani incorporated banks will seek permission of SBP (BP&RD) to establish their overseas subsidiaries and branches. They will have to differentiate between the establishment of expenses and minimum capital requirement/capital adequacy requirement of the overseas Central Bank/supervisory authorities. BR. July-March services trade deficit down 7% Services trade deficit has fallen by 7% during 9MFY16 supported by lower imports. According to the SBP, the country's services sector trade posted a deficit of $ 1.64Bn as compared to $ 1.76Bn in the corresponding period of FY15. Exports declined by 18% to reach $ 3.86Bn while services imports fell by 15% to $ 5.50Bn. BR. Govt. set to finalize agreements for Neelum Jhelum project The govt. will finalize loan agreements for 969MW Neelum Jhelum Hydropower Project with Chinese Exim Bank and local banks in the first week of May. According to the Ministry of Water and Power, the main problem with the project was its financial closing, which has been resolved as an agreement with China’s Exim Bank will be finalized on May 1, 2016 and with local banks on May 2. Whereas, loan agreement worth PKR 100Bn will be finalized with local banks. The Nation. Trade road shows in Moscow, Tehran after Ramazan Trade Development Authority of Pakistan (TDAP), under the supervision of Ministry of Commerce, will hold trade road shows in Moscow and Tehran after the month of Ramazan. TDAP is to hold a series of such shows in the Central Asian countries of Tajikistan, Kyrgyzstan and Kazakhstan in May 2016 in which Pakistan's products from export sectors will be displayed in professionally organized pavilions of Pakistan. The Nation. Iran plans single country exhibition in Karachi An official delegation led by Mehdi Honardoost, ambassador of Islamic Republic of Iran met apprised participants at a meeting that Iran is planning to organise a Single Country Exhibition in Karachi in Sep’16. Pakistan’s TDAP is also organizing a Single Country Exhibition in Iran in Aug’16. BR. Reserves reach $ 20.8Bn The country’s total liquid foreign exchange reserves stood at $ 20.79Bn for the week ending 22nd Apr’16, the SBP announced. Of the total reserves, the central bank held $ 15.99Bn, a fall of $ 38Mn from $ 16.03Bn in the preceding week. However, the commercial banks’ maintained a combined stock of $ 4.80Bn for the week. Dawn. NBP records 23% growth in profit National Bank of Pakistan (NBP) has recorded a pre-tax profit of PKR 6.2Bn during 1QCY16, 23% higher than corresponding period of 2015. Similarly, after tax profit also remained 23% higher at PKR 4Bn compared to PKR 3.3Bn for the quarter ended Mar. 31, 2015. This translates into Earnings per Share (EPS) of PKR 1.90 for Mar.’16 as against PKR 1.54 for quarter ended Mar. 31, 2015. BR. Corporate results: Pak Suzuki posts below-expectation profit of PKR 947.6Mn Pak Suzuki has posted a profit of PKR 947.6Mn (EPS: PKR 11.51) in 1QCY16, up just 0.2% compared to PKR 946Mn (EPS: PKR 11.50) in the same period of last year. Tribune. Byco’s nine-month loss amounts to PKR 41.48Mn Byco Petroleum Pakistan Limited saw its net loss reduce by almost 98%, amounting to PKR 41.48Mn (LPS: PKR 0.04) during the 9MFY16 on the back of return of stability in international crude oil prices. Whereas, net losses came down from PKR 1.67Bn (LPS: PKR 1.71) in 9MFY15. Tribune. List of Indicators WoW YoY Major Currencies 175 165 GBP, 28-Apr-16, 152.5 155 145 EUR, 28-Apr-16, 118.7 135 125 115 105 95 USD, 28-Apr-16, 104.7 85 75 Apr-15 Jul-15 USD Oct-15 GBP Jan-16 EUR Apr-16 Source: KCCI Research ; Oanda.com Quote of the Day “The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.” Dee Hock Chart of the Day Pakistan's Foreign Exchange Reserves ( FY99 - 10MFY16) 10MFY16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 11.0196 14.1411 0.0 2.5 5.0 13.1224 12.5976 12.3893 10.7697 6.4356 7.5 10.0 12.5 Value in $ Bn 20.79 15.2886 12.4252 11.3987 3.2315 1.9736 2.2892 18.699 15.0 18.2438 16.7504 15.6472 17.5 20.0 22.5 Source: KCCI Research, SBP 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