Junaid Makda, President of the Korangi Association of Trade and Industry (KATI), stated that given the increase in regional conflicts and global economic slowdowns, the decision to maintain the interest rate at 11% is “temporarily acceptable”.
The President of KATI highlighted the direct impacts of these conflicts on international trade, which indicates the need for a cautious approach regarding economic policies. Despite the low inflation rate of 3.5% recorded in May, Pakistan has yet to see a corresponding decrease in interest rates. Generally, lower inflation would lead to a reduction in interest rates to boost investment and enhance industrial activities.
Makda also mentioned that there is a longstanding demand within the business community to reduce policy rates to a single digit to lower operational costs and improve the competitiveness of Pakistani exports globally. He acknowledged the current economic strategy as a solidarity with the government during tough times but emphasized the need for policy adjustments favoring industrial development.
The recent increase in petroleum product prices, complicating the economic scenario further, is putting additional pressure on industries. A GDP growth target of 4.2% has been set for the fiscal year 2026, achieving this target will depend on creating a more supportive financial environment for the industrial sector.
Makda appealed to the government and the State Bank to consider a reduction of 2 to 3 percent in interest rates in the upcoming fiscal policy, provided that there are improvements in global and regional conditions. This adjustment is crucial for the stability and development of the national economy and the industrial sector. The business leader is optimistic about future industry-friendly government decisions that will advance Pakistan’s industry and its overall economic growth.