Rising pressures on macroeconomic stability highlighted

KARACHI: Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has expressed grave concerns over the mounting pressure of volatile global oil markets on Pakistan’s macroeconomic stability.

He warned that successive international oil shocks — compounded by high domestic levies — are crippling the country’s export competitiveness, widening the trade deficit, and threatening widespread industrial closures.

Atif Ikram Sheikh emphasized that with the prices of high-speed diesel (HSD) and furnace oil significantly inflating inland logistics, supply chains, cost of electricity generation, and manufacturing overheads, the country’s flagship export sectors are rapidly losing their footing against regional competitors.

The FPCCI chief explained that the country urgently needs a dedicated, strategic safety net for exporters to prevent widespread de-industrialization. Passing on the full brunt of global oil price escalations directly to the industrial sector will be completely unsustainable.

He said that the ripple effects of exorbitant freight and transportation costs are eroding the narrow profit margins that exporters rely on to secure international orders.

Atif Ikram Sheikh said that to successfully hedge the economy and industrial sector against these external shocks, FPCCI has proposed a multi-pronged approach. Foremost, the trade body demands an immediate suspension of the Petroleum Development Levy (PDL) for export-oriented manufacturing. This targeted safety net is essential to provide a critical financial buffer and preserve the country’s foreign exchange earnings.

Furthermore, President FPCCI called for a fast-tracked national transition towards alternative and renewable energy sources. In addition to fuel-specific interventions, the FPCCI leadership stressed the absolute necessity of rationalizing overall energy tariffs.

Bringing electricity and gas tariffs at par with regional competitors, such as Bangladesh, Vietnam, and India, is crucial, as these nations have successfully utilized strategic mechanisms to shield their core industrial bases from massive economic shocks.

To complement these efforts and ease the ongoing liquidity crisis, Sheikh also urged an aggressive reduction of the central bank’s exceptionally high policy rate to provide affordable working capital for industrial production.

Atif Ikram Sheikh highlighted that Small and Medium Enterprises (SMEs) — the backbone of the export supply chain — lack the financial muscle of larger corporations and will be the hardest hit.

He cautioned that SMEs are facing an immediate liquidity crisis as their operational costs surge sharply. Without targeted intervention, inevitable factory closures, shift reductions, and mass unemployment will follow.

Copyright Business Recorder, 2026