A senior business leader today warned that despite the Pakistan Stock Exchange reaching a historic high, the government must urgently address flashing warning signs in the real economy, including a rapidly widening trade deficit and an emergency-like situation in the crucial textile sector.
Speaking to the business community, Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum, stated that while the stock market’s performance is welcome, it is being dampened by a worrying deterioration in the country’s external sector and fundamental manufacturing base.
The comments came as the KSE-100 index surged past a historic milestone, gaining over 3,300 points in a single day to close at 182,408. Mian Zahid Hussain attributed this record to strong institutional buying and widespread expectation of a further interest rate cut in the upcoming monetary policy review. He noted that with inflation stabilised at 5.6 percent, conditions are favourable for a two percent reduction in borrowing costs, which would provide significant relief to industries.
However, he cautioned that this financial optimism is contradicted by a 34 percent expansion in the trade deficit during the first half of the current fiscal year, which has now reached $19.2 billion. This trend, he warned, could place renewed pressure on the rupee if not addressed.
The veteran business leader expressed deep concern over a 20 percent year-on-year decline in merchandise exports recorded in December, describing it as evidence of severe structural problems. While noting that a rise in the Manufacturing PMI to a 10-month high of 52.8 is a positive domestic indicator, he called the failure to translate this into sustained export growth a critical policy failure requiring immediate rectification.
Highlighting the crisis in the textile industry, the backbone of the national economy, Mian Zahid Hussain pointed out that the 2025 export figure of $17.85 billion masks a decline in volume, with the value inflated by higher global prices. He stated that exporters are operating with ‘one hand tied behind their backs’ due to high business costs and a persistent cotton shortage, with crop failures leading to production declining to approximately 5 million bales.
He urged the Ministry of Commerce to adopt an aggressive diplomatic and trade outreach strategy to secure new export markets, noting that competitors like Vietnam and China continue to outperform Pakistan due to their lower input costs and superior market access.
Commenting on the government’s proposed five-year tariff reform plan, which aims to simplify import duties into four slabs, Mian Zahid Hussain termed the reduction of duties on 2,700 raw material lines a positive step for boosting competitiveness. He advised caution, however, to ensure that an influx of cheaper finished goods does not undermine domestic import-substitution industries.
He concluded that a sustainable economic recovery requires a balanced approach, where stock market gains are supported by tangible growth in industrial output and exports, rather than being driven solely by financial speculation.