Sitara Peroxide, a manufacturer of hydrogen peroxide in the country, announced on Friday that its management has decided to shut its production for a month amid a global economic slowdown.

The company, in a notice to the Pakistan Stock Exchange (PSX), said that it would resume production after one month.

“Due to prevailing global and economic downturn, overdue plant maintenance and non-clearance of letter of credit of necessary raw materials, it is not possible to operate the production facility. Therefore, the management of the company has to temporarily stop the production activities of the company with immediate effect,” read the notice.

“The management is hopeful that the current situation will improve; enabling the Company to resume its production activities after one month,” it added.

In recent months, dozens of companies representing different sectors, especially textiles and automobiles, have announced complete or partial shutdowns citing issues ranging from inventory shortage, economic slowdown and inability to secure Letters of Credit (LCs) for imports.

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Experts have said that all economic indications of the first six months of the current year suggest that Pakistan’s GDP growth will be in the negative arena even though the World Bank has projected it at positive 2%.

Former finance minister Dr Hafeez Pasha, while talking to Business Recorder, contended that the economic situation was gloomy and the government's decision not to allow the opening of LCs had resulted in a reduction of imports in volume terms by 30%, but disturbingly led to non-availability of raw material which accounted for -3% growth of Large Scale Manufacturing (LSM) during July-October 2022 and -7% in October 2022.

Industrialists have also expressed concerns over closure of companies due to the non-availability of foreign exchange, calling for serious efforts to resolve the issue of LCs opening immediately.