The local unit of Suzuki Motor Corp. has extended the shutdown of its manufacturing plant until Feb. 21, according to a statement to the stock exchange on Friday, saying parts shortages persist.
Ghandhara Tire & Rubber Company, which makes tires and inner tubes for automobiles, closed its plant on Feb. 13, saying it faced “immense barriers to importing raw materials and getting shipments cleared from commercial banks”.
These are just two of a group of publicly traded companies that includes producers of fertilizers, steel and textiles that have closed their factories indefinitely or suspended operations intermittently as they grapple with inventory or liquidity shortages, or even a decline of the question.
Pakistan’s $3.19 billion in foreign exchange reserves mean the nation is unable to finance imports, stranding thousands of containers of supplies in its ports and halting production, putting jobs at risk. Inflation that is also at its highest in nearly half a century is putting many goods out of reach of the public.
“These closures will impact economic growth and increase unemployment levels in the country,” according to Tahir Abbas, head of research and investment at Arif Habib Limited, who said he has never seen such a scale of company closures. quoted.
“Overall demand has declined due to multi-decade inflation,” Abbas said. “So you see a normal demand destruction. In addition to this, we are taking administrative measures to slow down the economy.”
Like Suzuki, local units of Honda Motor Co. and Toyota Motor Corp. also experienced weeks-long plant shutdowns. That weighed on auto sales in Pakistan, which fell 65% to a nearly three-year low in January compared with a year ago, according to data from the Pakistan Automotive Manufacturers Association.
Among those that have also shut down or slowed operations are GSK Plc’s Pakistan unit, Engro Fertilizers Limited, Fauji Fertilizer Bin Qasim Limited, Nishat Chunian Limited, Amreli Steels Limited, Millat Tractors Limited and Diamond Industries Limited.
“The situation this time has become very critical compared to the crises we saw in 2018 or 2008,” said Abbas, who expects economic growth to slow to a range of 1% to 1.25%. in this fiscal year ending in June by 6% of the year. does.
