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KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI), President Mian Anjum Nisar has said that industry cannot survive in a high interest rate environment.
Speaking in the waking of monetary policy statement, which kept the key rate unchanged at 13.25 per cent, the industry leader said local businesses won’t be able to compete in the international market, where interest rate environment is much more conducive.
He said the policy rate in India is 5.15pc, China 4.35pc, Sri Lanka 8pc, Malaysia 3pc, Thailand 1.25pc, and Indonesia 6.5pc, which compared to Pakistan’s 13.25pc puts local industry at a disadvantage.
Economists have consensus over the use of expansionary monetary policy in a state of low economic growth and reduction in GDP, FPCCI chief said.
The industry is also facing high cost of doing business in Pakistan due to infrastructure and policy bottlenecks. Continued monetary tightening has constrained private sector cash flows and non-performing loans have increased by more than 23pc since tightening, he said.
The SBP keeps the high interest rate due to inflationary outlook, which has been on an upward trajectory.
Nisar urged the central bank to reduce the policy rate in order to increase demand of private sector credit which would ultimately help in industrialisation and economic growth.