Pakistan's effort to curb trade deficit by restricting imports is rapidly morphing into a bigger crisis of rising unemployment, according to a report. Official data on unemployment is sketchy at best on the issue but by taking the listed companies as a proxy for what's happening in the rest of the economy, the trend becomes crystal clear.
"An increasing number of businesses are either scaling back operations or shutting down production mainly for one reason: the unavailability of imported raw materials. Dozens of companies have issued notices of production halts in recent months. Curbing imports of raw materials to improve the trade balance is tantamount to cutting one's nose to spite one's face," according to the Dawn newspaper report.
All production units of Dawlance, a private company with Turkish sponsors, have stayed shut since the start of 2023. The company started facing import-related problems back in May 2022.
The central bank allowed it to make do with a quota of 38pc of its preceding year's imports in August last year. But the situation became even worse as bureaucrats and bankers began playing a "pick-and-choose" game with import orders, the company CEO told me in an interview.