Why gold losing its value, how long this trend will continue?

By Usman Ahmed

ISLAMABAD: Gold prices nosedived to $1358.356 level on Friday, for a seventh consecutive day in a worst fall since March 2009 amid speculation that US Federal Reserve is mulling over to end its Quantitative Easing (QE) program which was started in 2008.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were down 1.86% at $1,361.05 a troy ounce in US trading on Friday, up from a session low of $1,357.85 and down from a high of $1,391.25 a troy ounce.

Gold futures were likely to test support $1,347.50 a troy ounce, the low from April 18, and resistance at $1,444.15, Tuesday’s high.

Gold has lost nearly six percent of its value in the six sessions through Thursday. The metal is down 17 percent for the year and is on track for its worst weekly decline in a month. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to their lowest in four years.

The bearish trend is likely to continue next week as a number of Federal Reserve officials have confirmed that the central bank is seriously considering end its aggressive bonds buying policy, commonly known as QE.

    San Francisco Federal Reserve President John Williams said on Thursday that the central bank could begin easing up on the monetary gas pedal this summer and end its bond buys late this year if the job market improves.

Earlier Thursday morning, Philadelphia Fed President Charles Plosser said the central bank should reduce asset purchases starting next month.

Seventeen analysts surveyed by Bloomberg expect prices to fall next week, with eight bullish and three neutral, the highest proportion of bears in two weeks. The analysts were divided a week ago after gold rebounded as much as 13 percent from the two-year low of $1,321.95 an ounce on April 16.

In Pakistan, gold prices have slid down to PKR 52,500 per Tola  and PKR 45,000 per 10 grams.

Business community hails PML-N’s emergence as ruling party

By Usman Ahmed

ISLAMABAD: The emergence of Pakistan Muslim League – Nawaz (PML-N) as Pakistan’s powerful ruling party is being hailed by the business community, international agencies and stock markets as KSE-100 index has hit the 20,600 level for the first time in history.

The benchmark index of top 100 shares listed on the KSE has surged to 20,647 points. The market has risen approximately 22 per cent this year so far.

Business Community

Senior economic experts and leading brokerage houses said they were expecting a hung parliament and thus a weaker and unstablegovernment to come into power as a result of the elections.

The election results defied analysts’ predictions of a weak parliament as the PML-N looked able to form a government without the help of its traditional rival the Pakistan Peoples’ Party and new challenger Imran Khan’s Pakistan Tehreek-i-Insaaf.

Investors are hopeful of an economic revival under Sharif, whose pro-business policies earned him a good reputation among traders and industrialists during his two previous tenures in the 1990s.

He liberalised the economy by launching a privatisation programme and liberalised the financial sector allowing foreign investors to step into Pakistani capital markets,” Sohail said.

Mooday’s, Standard & Poor’s

International rating agencies Mooday’s and Standard & Poor’s have also expressed satisfaction over the victory of PML-N in general elections.

(Nawaz Sharif’s) PML-N’s near majority should provide it with sufficient political room to shape its own agenda. However, the new government will inherit the effects of overall policy inertia,” Moody’s said in a research report.

The agency further said “the previous civilian government which served out its full term had been unable to come to grips with these same challenges.”

 From a credit perspective, stable relations with the US would be key and any material flare-up in relations with neighbouring India could also have implications for Pakistan’s credit fundamentals, it said.

Stable relations with the US would be key as they would support the continued disbursal of Coalition Support Funds, which were suspended briefly in 2012…. And finally, any material flare-up in relations with neighbouring India could also have implications for Pakistan’s credit fundamentals,” Moody’s said.

Securing external support and reform progress will be central for bolstering Pakistan’s credit profile, Moody’s said and added that managing political risks will also be important.

While the likely victory margin for the Nawaz Sharif-led Pakistan Muslim League (Nawaz) or PML-N provides a seemingly strong mandate for governance, the in-coming government faces a number of key credit challenges that will be difficult to manage regardless of which coalition partner, if any, is required to achieve a Parliamentary majority,” Moody’s noted.

Standard & Poor’s Ratings Services noted that the elections were a positive for the nation and would help the country’s chances of getting international funding.

We believe the election outcome puts the incoming government in good stead to sew up an IMF (International Monetary Fund) deal soon,” Standard & Poor’s credit analyst Agost Benard said in a press release.

“This is a key achievement for Pakistan’s maturing democracy, in the face of general economic malaise, widespread and incessant sectarian and political violence, large-scale domestic insurgencies, and ongoing tension with neighboring India,” Benard said.

PML-N’s economic manifesto

If we analyze the economic manifesto of PML-N, the party has a correct realization of the problems that Pakistan faces — high and unsustainable fiscal and Balance of Payments (BoP) deficits; high and rapidly increasing burdens of domestic and external debts, which have resulted in large debt servicing; poorly performing public sector enterprises; no controls on non-development public sector expenditure; declining government outlays in such critical areas as education, health and skill development; very serious energy shortages; and very little investment in improving the economy’s  technological base.

Among the promises it has made are major improvements in all these areas. The manifesto is strong on the need for improving the physical and human resource base of the country. It promises that the state will work closely with the private sector to build roads, bridges, ports and (presumably) improve the railway system.

It also promises to increase the amount of electric power that is generated, especially by using the country’s enormous coal reserves — Thar coal, we are told, has 175 billion tonnes of reserves, enough to generate 100,000 MW of power for a hundred years. Exploiting this, along with renewable sources of energy will help to close the inequality of access that currently exists.

The manifesto indicates that power shortage is causing a loss of $5 billion a year to the economy and a loss of a million jobs. This has also reduced export earnings by $2.5 billion. As much as 40 per cent of the population does not have access to electricity.

Recognising that the provinces under the Eighteenth Amendment now have a lot of authority in economic matters, the party makes two interesting proposals. It will set up a wholesale market for energy, presumably one in which the energy-surplus provinces could sell to those who are in deficit.

It will also tackle the shortage of public funds for the building of needed infrastructure by allowing cities to raise capital from the market. Credit-worthy cities could sell infrastructure bonds to raise the amount needed for specific projects, according to party manifesto details published in a leading daily the Express Tribune.

Ties with India

The Lahore Agreement which was agreed upon by Nawaz Sharif and Atal Behari Vajpyee had given a new dimension to Pakistan-India ties. The process stalled due to Kargil misadventure but it was restarted in 2002 by the military ruler Pervez Musharraf but it suffered many deadlocks and discontinuity. However, PML-N’s victory in recent general polls and simple majority in the center have blessed a new life to the initiatives that were taken during Sharif’s tenure (1996-99).

Its an understanding among the Pakistani business community that India is a growing economy and trade ties with the neighbor will boost the economic activities in the region that will certainly bring stability in the region. India also understands that Pakistan’s geographical contiguity to the energy-rich central Asia can help quench its ever growing energy needs. The smooth transition of power in Pakistan after the completion of five-year democratic tenure in Pakistan has been hailed by New Delhi as well.

In a sign of his eagerness for a fresh start, Prime Minister Manmohan Singh was among the first to congratulate Sharif, saying he hoped they could chart “a new course” and inviting him to “visit India at a mutually convenient time”.

Singh’s felicitation to Sharif is the reflection of this fact that the leaderships of the two countries realize the importance of each other and it was taken as a positive sign by the businessman community.

Talking to an Indian news channel, NDTV, Nawaz Sharif said that his government would work to improve mutual ties particularly in the field of trade and economy.

Analysts believe that trade will be the top priority of Sharif’s government in Islamabad.

His pro-business outlook means he will make cross-border trade a priority and ensure that barriers to exports between the two countries are removed soon,” Former Indian foreign secretary Lalit Mansingh told AFP.

The stability of democratic system is vital for Pakistan’s economy. The smooth transition of power in the wake of recent parliamentary elections have further strengthened this notion. Pakistani industries can significantly minimize production cost by importing cheap raw material from India. In addition, Pakistan can also enhance its exports by capturing a market of more than one billion people. Thus, normalizing ties with India can uplift Pakistan’s flagging economy and help overcome key economic problems such as unemployment, inflation,  balance of payment and deteriorating foreign direct investment.

ECB reduces benchmark interest rate to record low of .50%

By Usman Ahmed

BRUSSELS: The European Central Bank (ECB) on Thursday cut its benchmark interest rate to a record low in May to strengthen deteriorating growth in the Euro-zone region.
 

The ECB delivered a 25 bp rate cut, taking the refi rate to 0.50%, broadly in line with market expectations. The central bank left the deposits rate unchanged at 0.0% and cut 50 bp the lending rate to 1.0%. ECB president Mario Draghi was to comment on the decision at a press conference later in the day.

Market participants will scrutinize Draghi’s comments for clues in regards to the central bank’s next course of action in dealing with an ongoing sovereign debt crisis.

A rate cut “is unlikely to be the end of the easing story for the ECB,” Frederik Ducrozet, an economist at Credit Agricole CIB in Paris, said before the announcement. “Weak growth and rapidly falling inflation provide a justification for bolder action.”

Meanwhile, Economic confidence as measured by the European Commission dropped to its lowest level since December, suggesting business executives and consumers doubt that Draghi’s predicted recovery this year will actually materialize.

On top of that, unemployment in the 17-member euro area rose to a fresh record of 12.1 percent in March and manufacturing output contracted for a 21st month in April.

    So far we haven’t seen any improvement in the situation,” Draghi said at a press conference in Washington on April 19.

“The central arguments for a rate cut are the persistently weak economic confidence indicators that don’t point to a rapid recovery, and the increasing danger of undesirably low inflation rates,” said Kristian Toedtmann, senior economist at DekaBank in Frankfurt. “We see an interest-rate move as more than just a cosmetic maneuver. It would keep long-term money-market rates low or even lower them further.”

Still, with economies like Spain and Italy stuck in recession and their banking systems wary of taking on more risk, today’s rate cut may not automatically pass through to companies and households wanting to invest.

Following the announcement, the euro trimmed losses against the U.S. dollar, with EUR/USD shedding 0.1% to trade at 1.3166.

Meanwhile, European stock markets remained mixed. The EURO STOXX 50 rose 0.1%, France’s CAC 40 shed 0.2%, Germany’s DAX advanced 0.2%, while London’s FTSE 100 dipped 0.2%.

Global markets suffer trillions of dollar loss amid China’s growth data

By Usman Ahmed

ISLAMABAD: Monday has proven to be one of the worst days of ongoing calendar as global stock and commodity markets suffered trillions of dollar losses amid China’s unexpected growth data.

US stocks declined, sending the Standard & Poor’s 500 Index to its biggest two-day drop in more than a month, after China’s economy grew at a slower pace than economists forecast, according to Bloomberg.

China’s gross domestic product rose 7.7 in the first quarter from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 8 percent median forecast in a Bloomberg survey of economists and 7.9 percent growth in the fourth quarter. Separate reports showed March industrial production rose less than estimated while retail- sales growth matched forecasts.

Natural gas futures dropped on Monday after investors sold the commodity for profits despite forecasts for wintry weather and below-normal temperatures to settle in for much of the central U.S, according to famous Forex news portal investing.com  .

On the New York Mercantile Exchange, natural gas futures for delivery in May traded at USD4.141 per million British thermal units, down 1.92%. The commodity hit a session low of USD4.122 and a high of USD4.290.

Natural gas prices rose late last week on forecasts for a return of colder-than-normal temperatures for the heavily populated eastern half of the U.S., though by Monday, investors sold and locked in profits, especially as fears of a global economic slowdown roiled markets worldwide.

Gold prices plunged amid panic selling on Monday after China reported that its first-quarter gross domestic product rate missed expectations and sparked a risk-off trading session, while soft U.S. factory data sent investors rushing to the safety of the dollar.

The dollar normally trades inversely from gold, which fell even harder than other risk-on asset classes amid sentiments that when U.S. recovery does regain steam, the Federal Reserve will unwind stimulus measures that have supported prices for several years now.

Weaker-than-expected output data in the U.S. and China sparked a global flight from risk on Monday that sent investors ditching the euro and other higher-yielding currencies for safe-haven dollar positions.

In U.S. trading on Monday, EUR/USD was down 0.45% at 1.3052, up from a session low of 1.3043 and off from a high of 1.3114. The pair was likely to find support at 1.3037, Friday’s low, and resistance at 1.3138, Thursday’s high.

Unprecedented surge in Pakistan’s national debt during last 5 years

By Usman Ahmed

Pakistan’s Public debt-to-GDP ratio mounted to 62.6 percent during Financial Year 2012 (FY12) and country’s total public debt now stands at Rs 12.9 trillion, according to annual report issued by the State Bank of Pakistan (SBP), which is more than double of the total national debt recorded in 2008 .

As of June 30, 2008, Pakistan’s total public debt stood at slightly over Rs 6 trillion, but, during its five-year tenure, the Pakistan Peoples Party (PPP)-led government has added Rs 6.9 trillion to the total debt stock, which means the incumbent government’s five-year borrowings are more than double of the country’s 61 years borrowings.

According to the Fiscal Responsibility and Debt Limitation Act of 2005, total debt should not exceed 60% of country’s Gross Domestic Product (GDP). The International Monetary Fund (IMF), However, believes even this threshold is too high. It suggests that developing countries like Pakistan must take their debt much below 60% of GDP to overcome hurdles standing in the way of venturing into world capital markets.

According to state bank, surge in public debt was due to a large fiscal deficit, increased government borrowings and exchange losses stemming from the depreciation of the Pak Rupee.

“Most of the increase in public debt was contributed by domestic debt: its share has increased from 54.7 percent in FY11, to 59.1 percent in FY12.  On the other hand, the stock of public external debt has declined by US$ 2 billion due to repayments to the IMF and currency revaluation impact.  However, in Rupee terms, this stock has increased due to the depreciation of Pak Rupee against US Dollar in FY12,” the central bank said in its annual report. “These debt dynamics indicate that Pakistan could move into a debt trap”

Stepping back, Pakistan’s external debt vulnerability has also increased during FY12; as in the absence of sufficient external inflows, the repayment burden of external debt (along with the financing of current account deficit) fell on the country’s foreign reserves. This resulted in downgrading of Pakistan’s sovereign credit rating to its lowest level, Caa1, by Moody’s in July 2012.

Furthermore, a regional comparison of Pakistan’s external debt also highlights the same dismal situation. According to the Global Development Finance 2012, Pakistan’s external debt is higher than the average South Asian and developing economies.

The state bank warns that a country cannot continue increasing its debt stock without a commensurate increase in its repayment capacity. Global experience shows that failing to adhere to this simple principle, has led to several episodes of defaults, on both external and domestic debts. To overcome the ongoing challenges to the macroeconomic stability of the country, SBP emphasizes the need for fiscal consolidation.

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Beijing’s control on Pakistan’s strategic Gwadar port irks US, India

By Usman Ahmed

The Prime Minister of Pakistan, Raja Pervaiz Ashraf, during the cabinet meeting on Wednesday, gave formal approval to a deal transferring the management of strategically located Gwadar port on the Arabian Sea, from Singapore to China.

The Gwadar Port in Pakistan’s southwestern Balochistan province is situated between South Asia, Central Asia and the Middle East. It is near the Pak-Iran border and strategic Strait of Hormuz, the gateway for about 20 percent of the world’s oil. It is also the nearest warm-water deep-sea port to the landlocked but energy-rich Central Asian republics as well as Afghanistan.

China, which has long been seeking an alternative to the Strait of Malacca, through which over 80 percent of China’s imported oil passes, financed 75 percent of the initial development cost of $248 million for Gwadar Port. To China, the port could be a conduit for energy flows into northwestern China, by transporting oil and gas from the port through pipelines that traverse Balochistan and the federal agencies to feed into China’s Xinjiang province. As China’s oil imports increase, it would prefer to insulate its energy flows from the turbulent waters of the Straits of Malacca and the South China Sea. Indian ships among others patrol the former as an anti-piracy measure. In the latter, China is involved in a territorial dispute with Vietnam and Philippines among others. In a conflict, it would be easy to shut off China’s energy supplies. But not if they can be routed through Gwadar where Pakistan Navy can also add to the security.

According to recent figures, over 60% of China’s imported oil travels through the Straits of Hormuz. Having Gwadar under its command would change the security dynamics for China. As China moves into the Indian Ocean, Gwadar port would be ideal as a staging ground for Chinese ships. China already has a steady presence in Sri Lanka’s Hambantota port, it is wooing Maldives, though no port presence is planned yet. China is also building a port in Chittagong, Bangladesh, as well as Sonadiya, near Cox’s Bazar.

The Gwadar port is currently being operated by Singapore’s PSA International, but needs further development work to become fully operational. According to PSA’s Gwadar website, there has been no ship in the port since November.

Pakistan’s Information Minister Qamar Zaman Kaira said Singapore’s PSA International could not develop or operate Gwadar “as desired” and hoped that under the new management the strategically located deep-sea port would soon contribute to Pakistan’s flagging economy. “The Chinese will make more investment to make the project operational,” Kaira said.

Responding to this major development, Chinese foreign ministry spokesman Hong Lei said on Thursday that Chinese companies have been actively involved in Pakistan’s foreign cooperation projects and China will always support projects conducive to China-Pakistan bilateral friendship and Pakistan’s development and prosperity.

Taking over Gwadar operations means that Beijing would be undertaking the biggest infrastructure project in Pakistan after it Karakorram Highway road project connecting the two countries in 1976.  China will be stepping into the port located at the entrance of the Persian Gulf about 75 km east of Pakistan’s border with Iran. It also evoked apprehensions among the Indian strategic community in India as it is in the proximity of Mumbai’s port.  China recently said it would construct another 20 berths at Gwadar if it was given the rights to operate the port. Beijing has been working to develop a string of harbours in the Indian Ocean and Arabian Sea, a region traditionally considered an Indian backyard.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said he believed that the injection of Chinese investment could soon vitalize the port with strategic importance.

“The Singapore company put more value in the commercial benefits in operating the port, but for China, its strategic values is greater than the commercial significance,” Lin said. “I do believe China will build the port at the astonishing ‘Chinese speed’ to materialize the port’s strategic values.”

Wang Weihua, a researcher on South Asia at the Shanghai Institutes for International Studies, said the Gwadar project as a port, and not as a naval base, may provide supplies for Chinese merchant ships and escort vessels, as well as serving China’s energy interests in the Middle East. He said that the transfer of the port management does not represent a threat to any country. Meanwhile, Chinese investment can help Islamabad to better develop the Baluchistan province and help boost Islamabad’s influence in the Muslim world, said Wang.

Liu Xiaoxue, a researcher on South Asia at the Chinese Academy of Social Sciences, said the port can stimulate the development of the bilateral free trade agreement, which was signed in 2006 but has not achieved as much as Islamabad expected.

“Still, it’s a little early to talk about the energy corridor as the cost of land energy transportation and risk of insecurity is still higher than maritime transportation,” Liu said.

According to defence and strategic analysts, China wants to use the port for commercial and defence purposes, which will undermine US influence in the Arabian Sea, who is already concerned about Beijing’s expanding regional influence.

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Economic crisis: Pakistanis spent Rs67.607b on mobiles, tea, cars

By Usman Ahmed

Despite poor economic conditions in the country, Pakistanis used mobile phones, tea and motorcars worth Rs32.962 billion, Rs17.454 billion, and Rs17.191 billion, respectively, during the first six months of the current fiscal year (2012-2013), according to the Pakistan Bureau of Statistics (PBS).

The PBS figures revealed that the country imported food stuff worth $2.157 billion during the first half (July-December) of the year 2012-13. The break-up of $2.157 billion revealed that import bill of milk products was up by 3.20 per cent, dry fruits and nuts 1.02 percent, import of tea increased by 6.46 percent, import of spices decreased by 30.06 percent, soyabean oil’s imports went up by 26.47 percent, palm oil import decreased by 18.92 percent, sugar import declined by 78 percent, import of pulses went down by 12.76 percent and import of all other food items decreased by 24.80 percent during the period under review.

Meanwhile, according to PBS figures, the country imported machinery worth of $2.907 billion. Transport group imports stood at $951 million, textile group $1.115 billion, agricultural and other chemicals $3.136 billion, metal group $1.529 billion, miscellaneous group imports were recorded at $402 million and all other items imports remained $2.026 billion during July-December period of 2012-13 against July-December period of 2011-12. It is worth mentioning here that Pakistan’s overall imports were recorded to $21.922 billion in July-December period of ongoing financial year as compared to $22.678 billion of the corresponding period last year.

The food exports of the country during first half of financial year 2012-13 increased by 4.82 percent as compared to same period of last year. The exports of overall food group were recorded at $2.054 million during July-December (2012-13) against the exports of $1.959 million during July-December (2011-12).

According to PBS data, the food exports from the country on month on month basis also increased by 14.34 percent and 18.01 percent during December 2012 when compared with December 2011 and November 2012, respectively. The food exports increased from $384.493 million in December 2011 and $374.465 million in November 2012 to $441.923 million in December 2012.

The major food items which recorded increase in their exports during the first six months of current financial year over same period of last year include sugar (100 percent), meat and meat preparations (43.74 percent), fish and fish preparations (2.64 percent), vegetables (38.28 percent), spices (25.07 percent), oil seeds, nuts and kernels (41.6 percent) and all other food items (17.31 percent).

Similarly the food items which recorded decrease in their exports include rice (12.33 percent), fruits (1.77 percent), pulses (56.68 percent), tobacco (40.91 percent) and wheat (61.49 percent). The overall exports from the country witnessed growth of 7.58 percent during the period July-December (2012-13) as compared to same period of last year. Exports from the country during July-December (2012-13) were recorded at $12.0513 billion against the exports of US$ 11.201 billion during the same period of last year.

Pakistan unlikely to achieve growth targets set for FY2012-13

By Usman Ahmed

The latest reports issued by the International Monetary Fund (IMF) and World Bank have revealed that Pakistan would miss, for the fifth consecutive year, the growth targets set for the financial year 2012-13 and the sluggish pace of economy will continue for at least two more years with a rise in unemployment.

GDP forecast

According to the IMF, the economy will grow by mere 3.5 percent this year, as against official projections of 4.3 percent, whereas the Global Economic Prospects Report 2013, issued by the World Bank last week, says Pakistan’s economy is expected to grow at a rate of 3.8 percent, half percentage point below the target of 4.3 percent set for fiscal year 2012-13 ending on June 30.

Pakistan, the second largest economy in South Asia, is clubbed with Nepal that has the economic growth projection of 3.8 percent. Even Sri Lanka at 6.1 percent and Bangladesh at 5.8 percent are projected to hit growth rates far higher than that of Pakistan.

Various studies, both independent and official, suggest that Pakistan requires 7-8 percent annual growth to create job opportunities for its youth as the country has witnessed sluggish growth the last five years, leaving hundreds of thousands jobless every year.

Budget deficit forecast

According to the World Bank, against the government’s target of 4.7 percent, the budget deficit is expected to hover above 6 percent, a projection which is lower than the IMF forecast. According to the IMF assessment, this year’s budget deficit will remain around 7-7.5 percent of the GDP.

Tax collection

In December 2012, the Federal Board of Revenue (FBR) collected Rs211 billion revenue while Rs686 billion had been collected from July to November 2012. From July 1, 2012 to January 9, 2013, the provisional tax collection has come to around Rs915 billion, which is 22 percent higher than the revenue collection during the corresponding period of fiscal year 2011-12.

According to media reports, the Ministry of Finance expects to collect around Rs2.231 trillion against the annual tax collection projection of Rs2.381 trillion with likely shortfall of Rs150 billion during the current fiscal year.

Rupee depreciation

During the current week, the exchange rate started with Rs97.71/Rs97.76 for buying/selling a US dollar. As foreign currency reserves held by the State Bank of Pakistan are gradually declining, the Pakistani rupee may touch or even cross the record rate of Rs100 a dollar amid falling reserves, IMF loan repayment and political instability.

The World Bank has also warned that currencies of several oil importing countries with low or eroded reserve buffers, such as Egypt, Pakistan and India, remain vulnerable.

Trade deficit

According to the Pakistan Bureau of Statistics (PBS) figures, although the trade deficit decreased by 14 percent during the first half of the current fiscal year as exports expanded by 7.58 percent and imports witnessed a decrease by 3.33 percent. In the other words, the overall exports of the country increased from $11.202 billion in July-December 2011-12 to $12.051 billion during July-December 2012-13. On the other hand, the imports decreased from $22.678 billion during the corresponding period of the last year to $21.922 billion during the same period of the current fiscal year. Thus, the trade deficit during the first six months of current fiscal year stood at $9.871 billion against the deficit of $11.476 billion during the corresponding period of the last fiscal year, showing a decline by 13.99 percent.

Though industrial activity has started picking up, however, the World Bank says the inadequate electricity and gas supplies to the industry continue to affect the performance of the industrial sector. It fears that the increase in exports in the first five months of the current fiscal year with an increase in garments and processed cotton products’ export may not continue during the remaining part of the year. Electricity shortages during the second half of December have already adversely affected textile production and may dampen export growth in subsequent months.

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