-EU parliament gives its go-ahead to get Pakistan extension in its preferential exports status to EU, till 2027.
*Growth Outlook improved*
-Growth outlook has improved to 3.5% for FY24 (industrial activity and crop production picked up) from 0.3% in FY23.
-Power Generation up 14% in Aug-23.
-Petroleum sales rebounded, Diesel up 11%, Petrol up 8%.
-Cement sales up 45% in Jul-Aug23; Auto sales up 49%; Urea offtake up 18% in Aug-23.
-FBR outpaced Tax target for Sep-23 as well as for 1QFY24; tax filing improved too in Sep-23 vs Sep-22.
*Agri Crops improved*
-Cotton production up 72% (bales already crossed last full-year figures), to post records in FY24.
-Rice output to reach 9mn tons; exports projected at more than $2.5bn this year with Mexico market access and more to Indonesia too).
-Wheat production to be at record 28mn tons in FY24, crossing last 5yr average.
-Credit to farmers up 35% Jul-Aug23, indicating strong pick-up in farm activity.
*Improvement in Currency & Commodities*
-Global Oil dropped to $87/bbl from $97/bbl.
-Petroleum prices down 3%, more cuts in the coming weeks due to 1) decline in Dollar/PKR, 2) decline global Oil prices, and 3) Russia lifting ban on diesel exports.
-Gold prices in the local market back to under Rs 200,000/tola after a long time.
-Pakistan’s rupee becomes one of the top-performers globally (up 16% or Rs 52/$ to Rs 282/$ from peak Rs 334/$) as govt and LEAs crackdown on the illegal Dollar trade and goods smuggling.
*Investments, Trade & Flows*
-Pakistan to receive $1.4bn collectively from IMF, WB and IDB.
-Pakistan to receive FDI commitments from KSA and UAE of around $3-5bn under the SIFC-driven projects.
-Rationalization of Afghan Transit Trade; FBR banning 212 items coming under ATT.
-Trade deficit down 48.2% in Sep-23; Exports up 1%, Imports down 25% (Trade Deficit down 42% in Jul-Sep23).
*More Positives expected ahead*
-Inflation to ease due to expected slowdown in food prices 1) better crop output/food production, crackdown on smuggling (sugar prices are coming down), and high base-effect.
-Better Crop productions to save forex exchange to the tune of $-5bn (replacing imports for cotton, wheat, lowering edible oil, and higher export of rice and textiles).
-Oil prices to remain in-check.
-Better Tax collection to support IMF’s 1st review in Oct/Nov-23.
-FDI announcement from KSA & UAE in Nov-Dec should support PKR/US$ in the short run.
-Trade deficit to be in check due to decline in Oil and better crop output (lower imports).
-Current Account deficit to be manageable around $6bn for FY24.
-Slowing down inflation (to well under 20% from 30% now) should lead to first interest rate cut in Mar-Apr24 to support. investment and economic activity.
*Risks*
Risks are: Oil prices going back up due to latest Hamas attack, delay in domestic elections, IMF reviews not being satisfactory, delayed investments flows/commitments from KSA/UAE, unending govt borrowing (printing rupee), massive debt repayments and imports pushing Dollar back up, and so on.
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