Leading economists and industry stakeholders call for an aggressive reduction in Pakistan’s interest rates to stimulate economic growth, encourage investment, and alleviate financial pressures on businesses and consumers.
Ismail Suttar, President of the Hub Chamber of Commerce and Industry (HCCI), observes that despite the current economic challenges and soaring inflation, there is a widespread consensus among stakeholders that reducing interest rates could be a crucial step towards facilitating the nation’s economic recovery and achieving sustainable long-term prosperity.
Over the past few years, Pakistan has faced significant economic challenges, including high inflation, sluggish growth, and an uncertain global economic landscape. With this, high interest rates continue to burden businesses and consumers, stifling economic activity and growth, says President HCCI.
Pakistan’s current policy rate of 19.5% is significantly higher than that of its neighbouring countries like China and India. This disparity has allowed them and competitors like Bangladesh and Vietnam to emerge and gain a competitive edge in the export market, acquiring most of Pakistan’s international textile customers. Ismail says, “Our manufacturers from all sectors struggle to control their production prices with rising inflation and interest rates. If the current policy rate is maintained, Pakistan risks further erosion of its export customer base, potentially exacerbating the trade deficit.”
President (HCCI) emphasizes the advantages of reducing interest rates, citing its potential to stimulate business growth and economic development. Lower interest rates can significantly decrease business borrowing costs, incentivizing investments in expansion, technology adoption, and workforce development. This, in turn, can enhance productivity and competitiveness in domestic and international markets. Furthermore, decreasing interest rates can provide vital financial relief to the Small and Medium Enterprises (SME) sector, empowering them to expand operations, drive innovation, and create employment opportunities. Given the SME sector’s pivotal role as the backbone of Pakistan’s economy, such measures can profoundly impact the country’s overall economic trajectory.
Pakistan stands at a critical juncture where proactive and bold economic policies are essential. I am certain that “by lowering interest rates aggressively, the nation can foster a conducive environment for growth, innovation, and prosperity”, says Ismail Suttar. This strategic move will benefit businesses and consumers and set the stage for sustainable economic development.
