FPCCI warns volatile oil prices threaten Pakistan’s macro‑economic stability
FPCCI president Atif Ikram Sheikh says rising global oil prices and high domestic levies are eroding export competitiveness, widening the trade deficit and could trigger industrial shutdowns unless policy relief is provided.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Oil price shock and high energy levies hurt Manufacturing, Cement, Steel, Textile and related sectors; avoid buying.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- CementNegatively affected
- SteelNegatively affected
- TextileNegatively affected
- PowerNegatively affected
- ManufacturingNegatively affected
- SMENegatively affected
Companies
Mentions in This Briefing
Sectors: Cement, Steel, Textile, Power, Manufacturing, SME — Negative · Do not buy. PSX tickers: PPL, INDU. Oil price shock and high energy levies hurt Manufacturing, Cement, Steel, Textile and related sectors; avoid buying.
Full Story
Open on Business Recorder## FPCCI raises alarm over oil‑price shock
Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), highlighted the severe strain that volatile global oil markets are placing on Pakistan’s macro‑economic stability. He noted that successive international oil price spikes, compounded by high domestic levies, are hurting export competitiveness, widening the trade deficit and risking large‑scale industrial closures.
## Impact on logistics and manufacturing costs
Sheikh pointed out that soaring prices of high‑speed diesel (HSD) and furnace oil are inflating inland logistics, freight, electricity generation costs and overall manufacturing overheads. These cost pressures are eroding the thin profit margins of exporters and making Pakistan’s flagship export sectors less competitive against regional rivals such as Bangladesh, Vietnam and India.
## Calls for immediate policy relief
The trade body urged the government to suspend the Petroleum Development Levy (PDL) for export‑oriented manufacturers as an urgent safety net. Sheikh also advocated for a rapid shift to alternative and renewable energy sources and for rationalising electricity and gas tariffs to bring them in line with regional competitors.
## Monetary policy and SME liquidity
To ease the ongoing liquidity crunch, Sheikh appealed for a swift reduction of the State Bank of Pakistan’s policy rate, which he described as “exceptionally high”. He warned that small and medium‑size enterprises (SMEs), which form the backbone of the export supply chain, are facing an acute liquidity crisis and could be forced into factory closures, reduced shifts and mass layoffs without targeted support.
## Outlook
The FPCCI’s multi‑pronged proposal aims to shield the industrial sector from external shocks, preserve foreign‑exchange earnings and sustain employment. The effectiveness of these measures will depend on timely government action.
## Key take‑aways
- Immediate suspension of the Petroleum Development Levy for exporters. - Alignment of electricity and gas tariffs with regional peers. - Accelerated transition to renewable energy. - Reduction of the central bank’s policy rate to improve working‑capital access for SMEs.