Firms are halting operations amid inventory shortfall | These closures will impact economic growth, analyst warns
\n Islamabad
\nAs cash-strapped Pakistan continues its efforts to avert a debt default, a shortage of raw materials and a severe liquidity crunch have forced several companies to halt operations in the last few months, Bloomberg reported Saturday.
\nThe critical position of foreign exchange reserves \u2014 which stand at around $3.19 billion as of February 10 \u2014 reflects the miseries of the $350 billion economy struggling to fund imports as thousands of containers of supplies were stranding at its ports stalling production and putting jobs of millions of people at risk.
\nArif Habib Limited Head of Research Tahir Abbas said that he has never seen such an extent of shutdowns among listed companies, warning that these closures will impact economic growth as well as increase unemployment levels in the country.
\n\u201cThe overall demand has tapered off because of the multi-decade inflation,\u201d Abbas said. \u201cSo you see normal demand destruction. Over and above this, we are taking administrative measures to slow down the economy.\u201d
\nExpecting economic growth to slow to a range of 1%-1.25% this fiscal year 2022-23 ending June from 6% in FY22, Abbas said: \u201cThe situation this time has become very critical as compared to the crises we had seen in 2018 or 2008.\u201d
\nA day earlier, Pak Suzuki Motor Company \u2014 one of the country\u2019s largest car manufacturers \u2014 announced its decision to extend the shutdown of the automobile plant till February 21 citing inventory shortfall as a major reason.
\nMeanwhile, Ghandhara Tyre & Rubber Company \u2014 manufacturer of tires and tubes for automobiles \u2014 shut its plant on February 13, saying it is facing \u201cimmense hurdles towards importing raw materials and obtaining clearance of consignments from commercial banks\u201d.
\nApart from these two listed companies, several others including manufacturers of fertilisers, steel, and textiles have shut down their factories indefinitely or suspended operations intermittently as they grapple with an inventory shortfall.
\nAlong with Pak Suzuki, Honda Motors, and Toyota\u2019s local units also went through weeks-long plant closures which affected the sales adversely \u2014 that fell 65% to the lowest in almost three years in January compared to a year ago.<\/p>\n","protected":false},"excerpt":{"rendered":"
Firms are halting operations amid inventory shortfall | These closures will impact economic growth, analyst warns Islamabad As cash-strapped Pakistan continues its efforts to avert a debt default, a shortage of raw materials and a severe liquidity crunch have forced several companies to halt operations in the last few months, Bloomberg reported Saturday. The critical […]<\/p>\n","protected":false},"author":2,"featured_media":314612,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-314602","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n