Interest rate hike strangulates investment: FPCCI.

Karachi -- Eng. Daroo Khan Achakzai, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) showed his serious concern over the hiking of policy rate by another 25 basis points in last two months in view of prevailing inflation, devaluation of currency and twin deficit in Pakistan.

He added that SBP continues to operate a tight monetary policy and increased policy rate by 4.50 percent in last one year despite the clear evidences that this policy strangulates investment in Pakistan and hampered the economic activities.

The statistics clearly showing that investment to GDP in Pakistan is very lower i.e. 16.4 percent of GDP compared to 22.5 percent in 2007 while in India the investment to GDP ratio is 30 percent and in Bangladesh it is 31 percent.

The President FPCCI termed the contractionary monetary policy as an anti-investment policy which has declined the economic activities in the first six month of the current fiscal year due to declining of large scale manufacturing growth particularly textile industry, food-beverages, petroleum, iron, pharmaceutical, electronics and wood products etc.

He indicated that the 10.5 percent policy rate is very high compared to regional economies like India 6.5 percent, China 4.35 percent, Sri Lanka 9.0 percent, Thailand 1.75 percent, Indonesia 6.5 percent, Malaysia 3.25 percent etc.

He said that the present inflation rate is 6.0 percent which is high compared to last year same period 3.8 percent; but this inflation is cost push inflation...