Outlook: Highs & Lows of 2024

IMF – yet again

It took a lot of high taxes and the removal of a bunch of subsidies, but Pakistan managed to secure $7bn from the IMF. As usual, the prime minister expressed the idle hope that this would be the last time we take the begging bowl to the lender of the last resort.

Bulls in the lead

The benchmark KSE-100 Index provided a gain of 75pc from January 01, 2024, till December 20, 2024, including dividends, according to Muhammad Sohail of Topline Securities. A year of bulls, it saw the index cross the 116,000 point for the first-ever but 2024 also witnessed the highest single-day drop of 4,800 points (at the time of writing).

Absurdity of internet disruptions

The government throttled the internet this year across the board. Previously, the country was prepared for disruptions on days like the 10th of Muharram and the election day. People had grudgingly accepted various bans over the years, like the ban on X, though even the prime minister uses it to post congratulations to his counterparts. But the internet disruptions hit a whole new level of horror with the Pakistan Software Houses Association estimating that such disruptions could cost up to $300m. Imagine the absurdity in the context of the Digital National Pakistan Bill that aims to revolutionise through digitisation. Imagine the absurdity in the context of targeting $25bn in IT exports, which are at around $3bn right now, when freelancers are losing their gigs.

A fiscal surplus

Pakistan posted a fiscal surplus for the first time in at least 24 years. Unprecedented profits by the State Bank because of the highest-ever interest rates and record petroleum level revenue helped achieve the surplus. The central bank posted an all-high surplus profit of Rs2.5tr owing to the monetary policy rate of 22pc and the record Rs262bn earned from the petroleum levy.

Riding on remittances

Pakistan posted a surplus of $729m in November, the highest in the last decade and Pakistan’s fourth consecutive month of surplus. While the improved trade balance helped, remittances are the star of the show, coming in at nearly $3bn as the government cracks down on illegal hawala/hundi.

Trump & crypto

The crypto boys are back in business, with Bitcoin hitting the historic milestone of $100,000 as the US president-elect Donald Trump branded himself as the pro-crypto candidate on the candidate trail. Pakistan has among the highest rates of grass-root adoption, and the end of the crypto freeze will rejuvenate many a cold wallet.

All that glitters

Gold recorded an all-time high of Rs277,000 per tola in October, but it has slid down since then. When the world is in turmoil, as it has been since the pandemic, investors rush to the safe haven of gold. Rates in Pakistan reflect international trends, and this year, central banks broke records in the first half of 2024, buying 483 tonnes of gold.

The favourable base effect

The year started with the monetary policy rate at 22pc; it ended at 13pc. The Monetary Policy Committee in the first meeting of 2024, was right when it predicted that headline inflation “will decline significantly in the second half of FY24 due to contained aggregate demand, easing supply constraints, moderation in international commodity prices and favourable base effect”. Inflation did hit a 78-month low at 4.9pc in November, even if it does not feel like it.

7 IPOs

The PSX saw an increase in offerings in 2024, with the bourse witnessing seven IPOs (including two GEM Board offerings), compared to just one IPO in the previous year. The total amount raised from investors through the seven offerings in 2024 stood at Rs8.4bn, marking the highest level since 2021, when there were eight offerings that raised a total of Rs19.9bn, according to Topline Securities.

Rice exports

Pakistan’s rice exports in 2024 reached new highs. In FY24 (which ended in June), Pakistan exported rice worth $4bn compared to $2.15bn in FY23. While local favourable weather conditions helped, the surge was because of India’s more-than-a-year-long ban on rice exports to fulfil its domestic needs. After all, India, too, had an election year and a very large population to feed, and Pakistan benefitted. Recently, India lifted price controls and reopened rice exports, but Pakistan seems to be maintaining its international sales.

Published in Dawn, The Business and Finance Weekly, December 30th, 2024