Pakistan Auto: Robust sales momentum continues - By Foundation Research

Dec 11 2024


Foundation Securities


  • Automobile (PC&LCVs) sales swelled 56% YoY (↓23% MoM) in Nov’24 to 10k units. During 5MFY25, sales have grown by a sizeable 51% YoY to 50,793 units given attractive auto financing schemes and declining interest rates. Total automobile sales clocked-in at 13,856 units (↑/↓ 36/9% YoY/MoM) in Nov’24. Player-wise breakdown unveils impressive volumetric jump of 129/10/117% YoY in INDU/HCAR/SAZEW respectively.
  • Sales reflecting strong recovery: The automobile sector witnessed a surge in sales during the month of Nov’24 as 800/1300cc sales shot up 42/93% YoY. While sales of 1000cc segment has declined 48% YoY. During 5MFY25, automobile sales recorded an increase of 51% YoY to 50,793 unitsled by growth in INDU, HCAR, Pak Suzuki & SAZEW at 65%, 50%, 41% and 3.3x YoY respectively. The robust increase in volumes is a resultant of (1) monetary easing (expecting further 250bps decline in Dec’24), (2) attractive auto financing schemes by banks to shore up ADR and increasing market competition, (3) stable exchange rates and HRC prices, and (4) improving macroeconomic variables.
  • INDU: INDU recorded volumes of 2,194 units, up 2.3x YoY (↓13% MoM) during Nov’24 despite 6 days plant shutdown. The surge in sales is driven by rise in sales of Corolla+Cross+Yaris to 1,822 units, up 2.6x YoY (↓13% MoM) supported by the recent reduction in Cross prices of upto PKR 400k. Additionally, Fortuner+Hilux sales grew 41% YoY (↓14% YoY/MoM) to 372 units. During 5MFY25, sales of Corolla+Cross+Yaris/Fortuner+Hilux swelled 79/35% YoY to 8,477/2,409 units respectively.

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Commercial Bank: 1QCY25 Universe earnings to grow 13%QoQ - By Taurus Research

Apr 18 2025


Taurus Securities


  • We expect 1QCY25 TSL Banking Universe earnings to grow 13% QoQ on account of lower cost of funds and provisions. Wherein, UBL and BAFL have already announced their results posting 39% QoQ growth and 52%QoQ growth in profitability, respectively. On an annualized basis, we anticipate earnings to go up 5%.
  • During the period, the State Bank of Pakistan cut its policy rate by 100bps to 12%. Resultantly, the industry spread on outstanding loans and deposits is estimated to have averaged ~6.50% as compared an average of 5.39% in the previous quarter—on the back of the re-pricing lag between the assets and the liability side.
  • Nevertheless, we anticipate a cumulative re-pricing of ~900bps in asset yields to have taken place by the period when compared to the corresponding period last year. Hence, affecting the interest incomes, specially on the investment books.
Pakistan Fertilizer: 1QCY25E Result Preview: Muted offtakes to weigh on profitability - By AKD Research

Apr 18 2025


AKD Securities


  • AKD Fertilizer Universe’s profitability is projected to decline by 16%YoY in 1QCY25E, primarily due to lower offtakes.
  • Company-wise, FFC profitability is expected to rise by 46%YoY post-merger, while EFERT and FATIMA earnings are projected to decline by 65%/6%, respectively.
  • FFC payout is expected to increase by 63%YoY, while EFERT dividend is projected to fall by 75%YoY
Economy: Pakistan’s Trade Deficit Narrowed in March’25 - By Sherman Research

Apr 18 2025


Sherman Securities


  • A detailed breakdown of trade numbers released by the Pakistan Bureau of Statistics (PBS) shows that, on a monthly basis, imports remained flat at US$4.8bn during Mar’25. This stability was primarily driven by lower imports in the petroleum and food sectors on a weighted average basis, while agriculture imports increased.
  • On cumulative basis, import bill was recorded at US$42.7bn (up 9%YoY) during 9MFY25 mainly due to higher imports of machinery, textile and agriculture, while petroleum and food imports declined.
  • Exports increased to US$2.6bn (up 6%MoM) during Mar’24. Likewise, during 9MFY25, exports clocked in at US$24.7bn (up 8%YoY), mainly due to growth in exports in the food and textile sectors.
Pakistan Economy: Power sector circular debt resolution plan in the offing - By Foundation Research

Apr 18 2025


Foundation Securities


  • Pakistan's power sector has become a key challenge in the country's macroeconomic balancing act. Stabilizing the economy hinges on resolving power sector issues, which took center stage in recent IMF negotiations for the $7 billion Extended Fund Facility. In a bid to settle the amount in a single go, the government has plans to inject Rs1.5 trillion to tackle the circular debt crisis, clearing overdue liabilities and paving the way for sector stability.
  • Commercial banks will provide nearly Rs1.275 trillion of the bailout package, despite already having significant exposure to the power sector's circular debt. The deal, negotiated between the government and banks, offers below-KIBOR interest rates, potentially saving the government 3-5% on debt servicing costs. Contrary to news flow of banks being pressured into the deal, top banking executives and government officials have assured that the agreement was reached mutually.
  • According to news flow, a term sheet was signed between the government and banks at a large commercial bank in Karachi, with disbursements slated to begin next month. This financial intervention aims to curb the energy crisis and prevent further debt accumulation.
Economy: Mar-2025: Current Account posts historic surplus - By JS Research

Apr 18 2025


JS Global Capital


  • Pakistan's current account balance posted a massive surplus of US$1.19bn in Mar-2025, bringing the 9MFY25 current account surplus to US$1.86bn. The improvement was driven by record-high remittances, with Mar-2025 inflows reaching US$4.1bn, a 37% YoY surge.
  • Balance of Payments (BoP) remained negative this month as well due to loan repayments. Monthly BoP figure has turned negative for the fifth time FY25TD. However, BoP balance remains in positive territory for 9MFY25.
  • We highlight that some planned foreign inflows have not materialized, likely to be unlocked post IMF disbursement. SBP governor recently revised the Jun-2025 reserves forecast to US$14bn, up from previous estimate of US$13bn. To note, SBP’s reserves have declined by ~US$1.1bn since Dec-24 while Import cover is down from 2.8months to 2.1months.
Pakistan Textile: Mar’25 Textile exports up 10%YoY - By Taurus Research

Apr 18 2025


Taurus Securities


  • Textile exports arrived at USD 1.43Bn in Mar’25 as compared to USD 1.3Bn in the SPLY, reflecting a growth of ~10%YoY. Whereas, on a monthly basis it only increased by 1%MoM. The increase was mainly due to the higher exports of cotton yarn, knitwear, bed wear, ready-made garments, art & silk, made-up articles and other textiles up 30%YoY, 15%YoY, 19%YoY, 12%YoY, 9%YoY, 10%YoY and 11%YoY, respectively. Moreover, 9MFY25 textile exports increased 9%YoY to USD 13.6Bn as compared to USD 12Bn in the SPLY
  • In Mar’25, Basic textile exports totaled USD 205Mn, down ~2% YoY, mainly attributed to decline in exports of cotton cloth and yarn. Whereas, value added exports showed a significant increase of 13%YoY along with a 9%YoY increase in other textiles.
Morning News: March C/A posts $1.2bn surplus - By Vector Research

Apr 18 2025


Vector Securities


  • Pakistan’s current account posted a record all-time high monthly surplus of $1.2 billion in March 2025, fueled by historic inflows of home remittances, according to data released by the State Bank of Pakistan (SBP) on Thursday.
  • Foreign Direct Investment (FDI) into Pakistan rose by 14 percent during the first nine months of this fiscal year (FY25). According to the State Bank of Pakistan (SBP), the country fetched FDI amounting to $1.644 billion in July-March of FY25 compared to $1.442 billion in the same period of last fiscal year (FY24), showing an increase of $202 million. During the period under review, FDI inflows were $2.472 billion as against $828 million outflow.
  • Pakistan’s central bank’s foreign exchange reserves dropped by $127 million to $10.57 billion during the week ended April 11 due to external debt repayments, the State Bank of Pakistan (SBP) said on Thursday. The total liquid foreign reserves held by the country also decreased by $91 million to $15.66 billion. However, the reserves of commercial banks increased by $36 million to $5.09 billion.
Technical Outlook: KSE-100; Consolidation to continue - By JS Research

Apr 18 2025


JS Global Capital


  • The KSE-100 index witnessed positive movement to close at 116,901, up 881 points DoD. Volumes stood low at 408mn shares compared to 482mn shares traded in the previous session. The index is currently trading above the 30-DMA and the 50-DMA that will restrict downside at 115,828 and 114,617 levels, respectively. However, any upside will face resistance in the range of 117,210-118,050 levels where a break above targeting 118,718 level. The RSI and the Stochastic Oscillator have moved up, supporting a positive view. We recommend investors to ‘Buy on dips’, keeping stoploss below the 30-DMA. The support and resistance levels are at 116,074 and 117,472 levels, respectively.
Morning News: March C/A posts $1.2bn surplus - By WE Research

Apr 18 2025



  • Pakistan recorded a historic monthly current account surplus of $1.2 billion in March 2025, driven by unprecedented remittance inflows of $4.1 billion, according to the State Bank of Pakistan. This marked a 229% increase from March 2024 and a significant reversal from February 2025’s deficit. Cumulatively, the current account showed a $1.859 billion surplus in July–March FY25, compared to a $1.652 billion deficit in the same period last year. Analysts hailed this as a vital boost for the economy, easing pressure on the rupee, supporting foreign reserves, and reducing reliance on external borrowing. While the trade deficit widened to $18.73 billion due to increased imports, moderate export growth and a $2.32 billion services deficit highlighted ongoing challenges. Despite persistent financial pressures and IMF support under a $7 billion program, Pakistan’s external sector is showing signs of recovery backed by policy reforms and improved macroeconomic stability.
  • Foreign Direct Investment (FDI) in Pakistan rose by 14% in the first nine months of FY25, reaching $1.644 billion compared to $1.442 billion during the same period in FY24, primarily due to strong inflows from China and Hong Kong and increased investment in the financial services and power sectors. China contributed the largest share at 41%, with its FDI doubling to $684.5 million. Despite this overall growth, March 2025 saw a sharp month-on-month decline of 91% in FDI. Economists attribute the positive trend to improved macroeconomic stability and IMF-backed reforms, but warn that sustained growth depends on consistent policies and political stability to maintain investor confidence.
  • Pakistan’s textile exports grew by 9.38% during July–March FY25, reaching $13.613 billion compared to $12.445 billion in the same period last year, according to the Pakistan Bureau of Statistics (PBS). Overall exports rose by 7.82% to $24.719 billion, with March 2025 exports totaling $2.646 billion—up 6.27% from February and 3.08% year-on-year. Textile exports in March specifically increased by 9.97% from February. However, rice exports declined by 5.91%, totaling $2.757 billion compared to $2.930 billion last year. Key export commodities in March included knitwear, readymade garments, bedwear, various rice types, cotton cloth, towels, and petroleum products, highlighting continued strength in the textile sector despite weaknesses in agricultural exports.
Lotte Chemical Pakistan Limited (LOTCHEM): 1QCY25 EPS clocked in at PKR0.44 – Below expectation - By Insight Research

Apr 17 2025


Insight Securities


  • LOTCHEM has announced its 1QCY25 result, wherein company has posted PAT of PKR0.7bn (EPS: PKR0.44) vs. PAT of PKR0.9bn (EPS: PKR0.59) in SPLY. The result is below our expectation due to lower than estimated revenue.
  • In 1QCY25, revenue decreased by 33% YoY, due to lower volumetric sales. While on QoQ basis, same is up by 6% possibly due to higher PTA prices and volumetric sales.
  • Gross margins of the company clocked in at 6.2%, up by 100bps/540bps YoY/QoQ, due to improved core delta.
Pakistan Economy: Power sector circular debt resolution plan in the offing - By Foundation Research

Apr 18 2025


Foundation Securities


  • Pakistan's power sector has become a key challenge in the country's macroeconomic balancing act. Stabilizing the economy hinges on resolving power sector issues, which took center stage in recent IMF negotiations for the $7 billion Extended Fund Facility. In a bid to settle the amount in a single go, the government has plans to inject Rs1.5 trillion to tackle the circular debt crisis, clearing overdue liabilities and paving the way for sector stability.
  • Commercial banks will provide nearly Rs1.275 trillion of the bailout package, despite already having significant exposure to the power sector's circular debt. The deal, negotiated between the government and banks, offers below-KIBOR interest rates, potentially saving the government 3-5% on debt servicing costs. Contrary to news flow of banks being pressured into the deal, top banking executives and government officials have assured that the agreement was reached mutually.
  • According to news flow, a term sheet was signed between the government and banks at a large commercial bank in Karachi, with disbursements slated to begin next month. This financial intervention aims to curb the energy crisis and prevent further debt accumulation.
Economy: Rating upgrade: Fitch upgrades Pakistan’s rating to ‘B-’ from ‘CCC+’ - By Foundation Research

Apr 16 2025


Foundation Securities


  • Fitch has upgraded Pakistan’s long term Issuer Default Rating (IDR) to ‘B-’ from ‘CCC+’ and has termed the country’s outlook ‘stable’.
  • The ratings agency highlighted key metrics behind the upgrade which included the following:
  • Fitch expressed confidence in Pakistan’s progress on the fiscal front with reduced deficits and implementation of structural reforms. Further, the agency stressed upon tight economic policy that is expected to support build-up of forex reserves and limited external financing needs
Pakistan Automobile: Strong auto sales momentum carried into Mar’25 - By Foundation Research

Apr 11 2025


Foundation Securities


  • In Mar’25, automobile sales grew 18% YoY, however, on a sequential basis volume declined 8% MoM to 11k units due to Ramadan effect. During 9MFY25, sales expanded by a mammoth 46% YoY to over 100k units. This surge can be attributed to declining interest rates, attractive auto financing schemes and promotional offers by both banks and auto assemblers. Player-wise breakdown portrays a notable volumetric surge of 84/87% YoY in INDU/SAZEW, respectively while HCAR recorded a decline of 35% YoY in Mar’25. Total automobile sales clocked in at 13k units (↓ 8/7% YoY/MoM) in Mar’25 whereas 9MFY25 sales were 127,463 units (↑20% YoY).
  • Positive sales growth remains prolific: The automobile sector witnessed a surge in sales during Mar’25 as Jeeps/Vans&LCVs/800/1300cc sales improved by 85/42/6/17% YoY while 1000c sales dropped by a sizeable 71% YoY. During 9MFY25, automobile sales surged 46% YoY to 100,868 units led by growth in INDU, HCAR, Pak Suzuki & SAZEW at 58%, 29%, 41% and 153% YoY, respectively. The healthy volumetric growth is on the back of (1) declining interest rates, (2) attractive auto financing schemes by banks & auto assemblers amid increasing market competition, (3) stable exchange rate and HRC prices, and (4) improving macroeconomic environment
  • INDU: INDU recorded volumes of 3,131 units, up 84% YoY (↑20% MoM) during Mar’25. The surge in sales is driven by a rise in sales of Corolla+Cross+Yaristo 2,378 units, a jump of 54% YoY (↑31% MoM), which we believe is owed to higher Yaris sales. Additionally, Fortuner+Hilux sales climbed 4.8x YoY (↓5% MoM) to 753 units with Hilux being the major contributor. During 9MFY25, sales of Corolla+Cross+Yaris/Fortuner+Hilux swelled 49/90% YoY to 15,980/5,638 units respectively.
Mughal Iron & Steel Industries Limited (MUGHAL): 1HFY25 Analyst Briefing Key Takeaways - By Foundation Research

Apr 9 2025


Foundation Securities


  • Mughal Iron & Steel Industries Limited (MUGHAL PA) held its analyst briefing to discuss the company’s financial performance during 1HFY25 and outlook.
  • Mughal Iron & Steels Industries Ltd’s(MUGHAL PA) profitability clocked in at PKR 210Mn (EPS PKR 0.63, down 73% YoY) in 2QFY25 against PKR 773Mn (EPS PKR 2.30) in 2QFY24. This takes 1HFY25 profitability to PKR 217Mn (EPS PKR 0.65, down 83% YoY) as compared to profit of PKR 1.3Bn (EPS 3.84) in 1HFY24.
  • Currently, the company is operating at maximum operational capacity; capacity utilization of furnace plant for melting is 80% and 65-67% for re-rolling. Moreover, the production mix for girders and rebars is 40-45% and 50-55%, respectively.
Pakistan Cement: Sales dropped MoM in Mar’25 due to Ramadan, prices in recovery phase - By Foundation Research

Apr 8 2025


Foundation Securities


  • Pakistan cement industry dispatches notched down by 9.4% YoY in Mar’25 to 3.57Mn tons (9MFY25: down 1.5% YoY to 33.99Mn tons). Domestic sales plummeted 11.3% YoY to 2.96Mn tons (9MFY25: -6.6% YoY), while exports exhibited an increase of 0.6% YoY to 0.61Mn tons in Mar’25 (9MFY25: +28.1% YoY).
  • Local cement sales remained lackluster during Mar’25 MoM due to Ramadan effect and Eid-ul-fitr holidays. Exports shot up by 28.1% YoY in 9MFY25 as cement players continue to explore new export destinations given the prevailing weak local demand.
  • On a YoY basis, domestic cement sales declined 11.3% during Mar’25 YoY on the back of (1) rise in royalty rates, (2) cement dealers strike pertaining to WHT and implementation of Point of Sale (POS) in Jul’24, (3) hike in cement prices (FED increased to PKR 4/kg in FY25 Budget), (4) elevated construction costs, and (5) high base effect given that this year Ramadan fell during the month of Mar’25 (ie. 10 days earlier).
Sazgar Engineering Works Limited (SAZEW): Revving up for the new era - By Foundation Research

Apr 7 2025


Foundation Securities


  • In a rapidly evolving automotive landscape, SAZEW’s entry into Pakistan’s 4-wheeler market capitalizing on the surging demand for SUVs, marked a pivotal moment. At the heart of this transformation stood the company’s resolve at redefining the industry with its sustainable forward-thinking approach - leveraging Greenfield incentives and expanding into the electric and hybrid segments. With the expected resurgence in the Auto sector, our positive view is underpinned by the company’s (1) brand equity of “HAVAL” in the 4-wheeler market, (2) robust gross margins to upkeep bottom-line, (3) efforts to penetrate further into the EV and HEV segment solidifying its green foot prints and (4) growth in iconic “SAZGAR” 3-wheelers along with broad products offerings - diversifying operational risks. In the light of the above, we initiate coverage on SAZEW with an ‘Outperform’ rating and a Dec’25 TP of PKR 1,504/sh, implying a 38% upside.
  • HAVAL's success story: HAVAL made its entry into the Pakistani market at a very opportune time. Where the SUV segment was slowly growing post the launch of KIA Sportage, MG-HS and Hyundai Tucson to name a few, HAVAL made a solid entry with the launch of Pakistan’s first locally assembled HEV. Consequently, the company has sold over 14k units in just 30 months. In 8MFY25, sales have exceeded 7k units and given the momentum, we opine reaching 12k mark in FY25 would not be a challenging feat. Plus, the collaboration with HIT to convert HAVAL H6 into a security vehicle and the recent MOU signed with Armed forces suggest robust volumetric growth going forward.
  • Elevated margins to stabilize but still remain higher than peers: SAZEW benefits greatly from its Greenfield status and AIDEP (2021-26) policy providing CD and ST concessions, which have resulted in stellar ~29% gross margins over the past 4 quarters compared to only ~10% when 3-wheelers was its main operating segment. Upwelling margins are expected to remain intact till FY26 when concessions end, whereby, we see them settling at ~16.5% in the longer term.
Pakistan Fertilizer: Sluggish trend continues - By Foundation Research

Mar 17 2025


Foundation Securities


  • With the Rabi season ending and no major sowing being done, fertilizer offtake continues its sluggish trend. In Feb’25, Urea sales recorded a decline of 36/22% YoY/MoM to 347KT. Company wise analysis reveals that FATIMA urea offtake improved 42/24% YoY/MoM to 69KT in Feb’25, whereas FFC/EFERT recorded a decline of 35/52% YoY to 156/94KT, respectively. Industry DAP offtake dwindled 65/35% YoY/MoM in Feb’25 to only 40KT. FFC/EFERT DAP offtake declined 83/86% YoY to 25/3KT, respectively, whereas FATIMA DAP offtake inclined 22/64% YoY/MoM to 4KT.
  • Fertilizer sales remained lethargic in Feb’25: Pakistan domestic Urea offtake declined by 36/22% YoY/MoM in Feb’25, reaching 347KT. DAP offtake dropped 65/35% YoY/MoM to 40KT. NP offtake lessened/increased 46/19% YoY/MoM in Feb’25 to 44KT, while CAN offtake deteriorated 3/12% YoY/MoM to 66KT. Industry urea inventory levels have stayed on the lower end due to no imports and lower production reaching 536KT in Feb’25. DAP inventory has also eased off to 160KT due to no imports in Feb’25. Companywise urea inventory was recorded at 67/280/168/21KT for FFC/EFERT/FATIMA/AGL, respectively, in Feb’25. DAP inventory of FFC/EFERT reached 66/57KT.
  • FFC/EFERT offtake dropped YoY: FFC/EFERT urea offtake dwindled 35/52% YoY, respectively, to reach 156/94KT in Feb’25. We attribute this decline solely to the seasonality factor. Where the whole industry has undergone decline in offtake, FATIMA experienced a surge in Urea dispatches to the tune of 42% YoY to 69KT. This increase in sales is attributable to better gas availability in recent months.
Indus Motor Company Limited (INDU): 1HFY25 Analyst Briefing Key Takeaways - By Foundation Research

Mar 13 2025


Foundation Securities


  • Indus Motor Company Limited (INDU PA) held its analyst briefing today to discuss the company’s financial performance during 1HFY25 and future outlook.
  • INDU posted net sales of PKR 84.8Bn (↑67% YoY) in 1HFY25, which were driven by surge in volumes. INDU sold 12,541 units (↑82% YoY) in 1HFY25, with contribution from Corolla+Yaris+Cross & Fortuner+Hilux of 9,633 & 2,908 units respectively, up 83% & 52% YoY.
  • The company’s gross margin improved from 9.3% to 13.8% in 1HFY25 given lower input cost aided by favorable exchange rate, cost optimization, and localization efforts. Additionally, investment in green energy has also been fruitful in reducing cost as Solar Energy contributes ~25% in the power mix.
Pakistan Automobile: Auto Sales remained upbeat in Feb’25 - By Foundation Research

Mar 12 2025


Foundation Securities


  • In Feb’25, automobile (PC&LCVs) sales grew 24% YoY, however, on a sequential basis volumes declined 27% MoM to 12k units as January effect dissipated. During 8MFY25, sales expanded by a significant 50% YoY to 89.8k units. This surge is accredited to declining interest rates, attractive auto financing schemes and promotional offers by both banks and companies. Player-wise breakdown portrays a notable volumetric surge of 28/35/113% YoY in INDU/HCAR/SAZEW respectively in Feb’25. Total automobile sales clocked in at 14,104 units (↑/↓ 5/30% YoY/MoM) in Feb’25 while 8MFY25 sales touched 114k units (↑24% YoY).
  • Positive sales growth momentum continues: The automobile sector witnessed a surge in sales during Feb’25 as 800/1000/1300cc sales improved modestly by 6/7/19% YoY. During 8MFY25, automobile sales increased 50% YoY to 89,770 units led by growth in INDU, HCAR, Pak Suzuki & SAZEW at 54%, 47%, 44% and 166% YoY respectively. The healthy volumetric growth is on the back of (1) monetary easing, (2) attractive auto financing schemes by banks amid increasing market competition, (3) stable exchange rates and HRC prices, and (4) improving macroeconomic environment.
  • INDU recorded volumes of 2,611 units, up 28% YoY (↓22% MoM) during Feb’25. The surge in sales is driven by a rise in sales of Corolla+Cross+Yaris to 1,820 units, a marginal ↑3% YoY (↓15% MoM), with major portion coming from Yaris sales in our view. Additionally, despite tough competition from Ghandhara Automobiles (GAL) by their successful launch of JAC T9 Hunter (LCV), a direct competitor of Hilux, Fortuner+Hilux sales climbed 2.9x YoY (↓33% MoM) to 791 units. During 8MFY25, sales of Corolla+Cross+Yaris/Fortuner+Hilux expanded 48/74% YoY to 13,602/4,885 units respectively.
Pakistan Economy: Policy rate left unchanged at 12.0% - By Foundation Research

Mar 11 2025


Foundation Securities


  • SBP surprised markets on Monday by keeping the policy rate steady at 12.0%, defying expectations of a 50-100 basis point cut. Although February's inflation rate came in lower than expected, the SBP cited concerns over volatile food prices, persistent core inflation, and renewed external account pressures as reasons for maintaining the rate. The central bank believes real interest rate remains sufficiently high to support ongoing macroeconomic stability. We believe that the pause was also warranted by a desire to appease the visiting IMF mission which is undertaking the 1st review of the USD 7.0Bn facility, and concerns that the full impact of the 1,000bps cut in policy rate over the last 6 reviews would manifest itself in the form of higher growth and imports over the next 6-12 months and disbalance the external account.
  • February's CPI inflation dropped to 1.5% YoY, its lowest level since Sept’15, primarily due to a decrease in food prices resulting from ample agricultural supplies. However, core inflation in rural areas remained high, with double-digit growth indicating persistent underlying price pressures. Looking ahead, SBP expects headline inflation to decline further before gradually rising and stabilizing within the 5-7% target range.
  • Despite the ongoing decline in manufacturing output, the SBP remains optimistic about economic growth, pointing to encouraging high-frequency indicators and reduced risks to Rabi crops. The SBP expects economic activity to pick up pace during the 1HCY25, driven by easing financial conditions and the delayed impact of previous policy rate cuts. The GDP growth forecast for FY25 remains unchanged at 2.5-3.5%. This outlook follows a modest 0.9% YoY economic expansion in 1QFY25.