Pakistan’s Manufacturing Growth Slows in April

The expansion of Pakistan’s manufacturing sector experienced a slowdown in April, reaching a seven-month low. The HBL Pakistan Manufacturing Purchasing Managers’ Index (PMI) decreased to 51.9 from 52.7 in March, according to a statement by HBL. This decline reflects concerns regarding global trade dynamics.

Humaira Qamar, Head of Equities & Research at HBL, suggested that the recent downturn in the index indicates the effects of U.S. trade policies.

According to Humaira Qamar, the recent PMI declines appear to be preliminary signals of the difficulties confronting the global economy as a result of the implementation of U.S. tariffs.

New orders experienced a decline, with export orders showing a particularly sharp decrease. Additionally, employment figures decreased for the second consecutive month as businesses implemented cost-cutting measures, Qamar noted.

Qamar cautioned that any economic stagnation in the U.S. could negatively impact Pakistan’s exports, especially to the U.S., which accounts for 18% of Pakistan’s total exports. This situation could potentially prolong the manufacturing slump, although reduced commodity prices might offer some relief, she added.

Despite the deceleration, the PMI value remains above 50, which signifies continued expansion supported by a favorable inflation outlook.

Qamar anticipates a reduction in the interest rate on Monday, driven by significant deflationary pressures. However, a survey indicates that the State Bank of Pakistan is expected to maintain stable rates at 12%, following a surprising decision to pause at its last meeting due to geopolitical uncertainties and concerns about inflation.

Pakistan’s annual inflation rate decreased to 0.3% in April, which is considerably lower than the Ministry of Finance’s projection of 1.5% to 2%. The central bank has projected an average inflation rate between 5.5% and 7.5% for the fiscal year concluding in June.

HBL, Pakistan’s largest bank, along with S&P Global, a global provider of financial information and analytics, introduced the index in February to monitor Pakistan’s manufacturing sector.