The capital market continued its bullish momentum in the second trading session of the New Year, surpassing the 118,000 point mark for the first time in history.
The rebound was driven by reducing inflation, strengthening macroeconomic fundamentals and renewed optimism about the government’s ambitious reform agenda.
The optimistic momentum was further aided by the government’s revenue collection efforts and the unveiling of a transformative economic growth plan focused on boosting investments and driving export-led development.
The Pakistan Stock Exchange (PSX) benchmark KSE-100 index rose 1,359.73 points, or 1.16%, during early trade on Thursday, hitting an intraday high of 118,169.81.
At a meeting of the federal cabinet on Wednesday, Prime Minister Shehbaz Sharif expressed satisfaction over the macroeconomic stability achieved so far but stressed the need to shift focus towards growth. “Now we have to take off in the export sector, since there is no other option for economic development,” he stated.
Underlining the importance of export-led growth, Shehbaz noted that the Federal Board of Revenue (FBR) needs to adopt stricter enforcement measures to meet the revenue targets set under the conditions of the International Monetary Fund (IMF).
The Prime Minister also highlighted the recent increase in revenues, which reached a 25-year high. However, he acknowledged a significant gap between the revenue collected and the ambitious targets set by the IMF.
Inflation data has also boosted investor confidence. The Consumer Price Index (CPI) fell to 4.1% year-on-year in December 2024, down from 4.9% in November and a staggering 29.7% in December 2023.
While the year-on-year decline indicates macroeconomic stability, month-on-month inflation rose slightly, by 0.1%, pointing to underlying cost pressures.
Prime Minister Shehbaz on Tuesday launched ‘Uraan Pakistan’, a five-year plan for national economic transformation. The initiative aims to attract $10 billion annually in foreign investment and stimulate local investments through sustainable export-led growth.
Anchored on the “5Es” (exports, e-Pakistan, environment, energy, equity and empowerment), the plan targets a GDP growth rate of six per cent by 2028, the creation of one million jobs a year and solid contributions from the private sector.
On the trade front, Pakistan’s trade deficit rose 35% year-on-year in December to $2.44 billion, the highest since April 2024. Imports rose to a 27-month high of $5.285 billion, while exports recorded a modest 0.67% year-on-year. -year, standing at 2,840 million dollars.
On a monthly basis, the trade deficit increased by 47%, reflecting a sharp increase in import activity.
The FBR reported raising Rs 5,623 billion in the first half of fiscal year 2024-25, although it fell short of the IMF’s target of Rs 6,009 billion. Measures such as a flat 44% tax on banking sector profits generated 72 billion rupees in revenue, providing a partial cushion against the deficit.
On Wednesday, the PSX posted a solid gain, with the KSE-100 index rising 1,881.18 points, or 1.63%, to close at 117,008.08. Analysts blamed the new allocations and better-than-expected tax collection figures, hinting that additional tax measures may not be necessary.
The combination of a well-defined economic strategy, reducing inflation and improving investor confidence positions the PSX for sustained positive momentum.
