FinMin estimates Rs86b daily losses across the services sector, including financial services, transport, retail
Finance Minister Muhammd Aurangzeb speaking in a televised recorded message. SCREENGRAB
Finance Minister Muhammad Aurangzeb on Sunday warned that long marches, sit-ins and strikes could cost Pakistan’s economy around Rs120 billion a day, describing disruptions to economic activity as “self-inflicted pain” at a time when the country was trying to shift from economic stabilisation to sustained growth.
The statement came after three groups, Jamaat-e-Islami (JI), Kissan Ittehad and Pakistan Tehreek-e-Insaf (PTI), announced plans for long marches in Islamabad in the coming week. The groups were protesting separate issues, with JI demanding the removal of the petroleum development levy, Kissan Ittehad seeking relief for farmers, and PTI calling for the release of party founder Imran Khan from jail.
In a televised recorded message, Aurangzeb said the government had worked with the Planning Commission’s economic wing to assess the potential impact of protests, road blockages and business closures, drawing on both previous experience and the country’s current economic conditions.
“If this economic stabilisation that we have achieved with great effort, difficult decisions and continuous efforts is disrupted by protests, sit-ins, road blockages and the closure of business and economic activities, what would the results be?” he said.
Based on the assessment, he said such disruption could result in an estimated Rs120 billion loss per day, with the services sector expected to bear the largest share of the impact.
“We estimate that there could be a loss of around Rs86 billion per day in the services sector”, Aurangzeb said. The estimate covered financial services, communications, transport, retail, wholesale and hospitality.
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The industrial sector could suffer another Rs25 billion in daily losses, he said, with the estimate covering construction, finished goods, raw materials and supply chain-related activity. Agriculture could account for a further Rs9 billion a day in losses, including the impact on transportation, perishable goods, dairy, supply chains and agricultural trade.
The finance minister said the economic cost would extend beyond lost business activity, with government revenues also expected to take a hit.
“If there is a disruption in economic activity, we estimate that there could be around Rs17 billion in revenue loss,” he said.
Aurangzeb said the figures were particularly significant because Pakistan had only recently begun moving from stabilisation towards growth after a period of economic contraction.
“Some years ago, our economy actually contracted,” he said, noting that GDP growth had reached 3.7 per cent last year. He expressed hope that growth would exceed 4 per cent this year, citing improvements in large-scale manufacturing, corporate profitability and investment activity.
Large-scale manufacturing had shown recovery last year and continued to record both month-on-month and year-on-year growth in July and August, he said.
Aurangzeb also pointed to activity at the Pakistan Stock Exchange (PSX), saying the number of investors had increased while 11 initial public offerings were conducted during the previous year and five more had taken place in the first two months of the current year.
“These are all companies that are trying to expand their businesses and will continue to do so, and therefore they are raising equity or setting up new units,” he said.
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He described these developments as “leading indicators” supporting his optimism about the country’s economic trajectory. “I am very optimistic, God willing, that this journey of economic growth will increase further,” he said.
Aurangzeb said Pakistan’s next phase of growth had to be driven by exports rather than a return to the boom-and-bust cycles that had characterised previous periods.
“We have to move from economic stabilisation towards GDP growth and make it sustainable,” he said. “We have to take it forward responsibly so that we do not go back into the boom and bust cycles.”
The government had set a goods export target of $32.9 billion for the year, representing an expected increase of around six per cent, he said. Exports during the first two months had remained on what he called “a good trajectory”.
But he warned that domestic disruptions could quickly undermine that progress.
Aurangzeb said Pakistan’s daily goods export volume was around $90 million and that previous disruptions had demonstrated how severely exports could be affected.
“In the worst-case scenario, we have previously seen our exports being affected by almost 50 per cent,” he said, warning that prolonged disruption would cause a significant setback to the country’s growth trajectory.
“The situation in the Gulf and the situation in the Bab el-Mandeb are already putting pressure on our exporters and our business community,” he said.
Supply chain disruptions had pushed up freight and insurance costs, he added.
“Business people know very well that there are problems in trade at the moment because of supply chain disruptions,” Aurangzeb said. “Freight costs have increased significantly, and insurance costs have increased.”
The additional domestic disruption caused by strikes or road blockages would therefore come at a time when businesses were already dealing with higher external costs, he said.
The finance minister said the headline economic figures did not fully capture who would bear the cost of disruptions. “The immediate burden of this falls on the people,” he said. “It falls on the ordinary person, the daily wage worker, and similarly on small shopkeepers and small businesses.”
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He also referred to the security situation, saying Pakistan was dealing with a wave of terrorism in some areas and pointing to the recent incident in Kohat in which security personnel were killed.
“Our army and our civil armed forces are ready to confront them and are confronting them,” he said.
Against this backdrop, Aurangzeb urged political and other stakeholders to consider the wider economic consequences of long marches, sit-ins and strikes.
“This would be self-inflicted pain,” he said, arguing that disruptions would undermine the economic gains achieved through difficult decisions and sustained efforts.
He said the government had also considered the additional costs that could arise from security deployments, logistics, transport and fuel if large-scale protests took place, saying these would place a further burden on the national exchequer.
Aurangzeb said maintaining stability was also essential for attracting investment, pointing to the recent increase in foreign direct investment.
He said Foreign Direct Investment had reached $311 million in August and argued that further investment would depend on a sequence of improvements beginning with economic stability.
“There is a whole cascade, a whole system,” he said. “First comes economic stability, which I call basic hygiene. After that comes confidence among our local investors. Then come the foreign investors.”
The finance minister said the government’s recent economic measures, including efforts to improve tax collection and increase investment, were intended to establish a more sustainable growth model.
Tax revenues had increased by 40 per cent over the previous two years, he said, adding that the government was seeking to further broaden and deepen the tax base through the Federal Board of Revenue.
Aurangzeb said the country had reached a point where preserving economic stability was a shared responsibility.
“This is very hard-earned macroeconomic stability, and now we are moving towards growth,” he said. “There were very difficult decisions, as I said earlier, and our economy, after a long time, is now back on track.”
He urged stakeholders to resolve their differences through dialogue rather than actions that could disrupt economic activity.
“My request is that whatever problems we have, we should sit together,” he said, stressing that Pakistan’s transition from stabilisation to growth should not be derailed.
“I would only say that it is our collective responsibility that the journey we are now on, from economic stabilisation towards economic growth, should continue,” he added.
