CPI Drop, Exports Growth, EU GSP Review, Cement Rebound, Pak-KSA Oil Deal, US-Russia Talks.

TOPLINE

• Pakistan's CPI inflation dropped to 2.41% YoY in January 2025, the lowest in 111 months, down from 4.1% in December 2024 and 28.3% a year earlier.
• Pakistan’s exports grew 10% to $19.55 billion in the first seven months of FY25, while imports rose 6.95% to $33 billion, widening the trade deficit by 2.84% to $13.49 billion.
• The EU will re-review Pakistan's GSP+ status in June 2025, following a recent visit to assess compliance with 27 conventions. Failure to meet requirements could lead to suspension of benefits.
• Pakistan’s cement sector saw a rebound in January 2025, with domestic dispatches rising 11.64% YoY to 3.313 million tonnes and exports surging 30.25% to 581,691 tonnes. Total shipments grew 14.08% to 3.894 million tons.
• Pakistan and Saudi Arabia signed two agreements worth $1.61 billion, including a $1.20 billion deferred payment arrangement for oil imports and a $41 million concessional loan for a water project in Mansehra.
• Russia is considering Saudi Arabia and the UAE as potential venues for a summit between US President Trump and Russian President Putin. Trump has shown willingness to meet Putin to discuss Ukraine and energy. Meanwhile, the US-Canada-Mexico trade war could lead to higher prices due to rising tariffs and disrupted supply chains.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Daily Rates: Find the following rates on the hyperlinked titles: [Shipping Intelligence], [Pakistan Stock Exchange], [Kibor International Kibor Rates], [BRIndex100 & BR Sectoral Indices], [Activities of Karachi Port Trust, Port Qasim]
• Pakistan CPI Falls to 2.41%: Pakistan's CPI inflation dropped to 2.41% YoY in January 2025, the lowest in 111 months, down from 4.1% in December 2024 and 28.3% a year earlier. While this disinflationary trend offers consumer relief, key food and non-food items still saw notable price hikes, especially in rural areas. [Dawn] [ET] [ET]
• Pakistan’s Exports Rise 10%: Pakistan’s exports grew 10% to $19.55 billion in the first seven months of FY25, while imports rose 6.95% to $33 billion, widening the trade deficit by 2.84% to $13.49 billion. Despite this, the current account remains in surplus since August 2024, with December 2024 recording a $582 million surplus, up from $279 million a year earlier. [Dawn] [The News]
• ECC Flags Food Price Rise: The ECC raised concerns over rising sugar, vegetable, and edible oil prices despite falling global rates, while reviewing inflation trends. Inflation dropped to 7.2% in July-December FY25 from 28.8% a year earlier, with December 2024 hitting an 80-month low at 4.1%, aided by exchange rate stability and better supply management. [Dawn] [The News]
• Gold Prices Hit Historic High: Gold prices hit a historic high on Saturday, with 10 grams priced at Rs 250,514 and one tola at Rs 292,200, rising by Rs 343 and Rs 400 from Friday. The global price increased by $5 to $2,797/ounce. The price has been rising for 10 consecutive days. [Dawn]
• Flea Markets Provide Affordable Winter Wear: As woollen clothing prices rise, flea markets in Pakistan are becoming vital for low-income families, offering affordable second-hand winter wear. People from cities like Rawalpindi and Islamabad visit these markets each winter to buy essential items like sweaters, jackets, and socks to protect against seasonal health issues such as allergies and flu. [ET]
• EU to Re-Review Pakistan's GSP+ Status: The EU will re-review Pakistan's GSP+ status in June 2025, following a recent visit to assess compliance with 27 conventions. Failure to meet requirements could lead to suspension of benefits. Pakistan's cotton production is 50% below target, with large unsold reserves causing concerns. The country may need to spend over $4 billion on cotton, cotton yarn, and edible oil imports. Cotton production is down 34% from last year, and unsold stocks have risen by 31%. [ET]
• Sindh Enacts Agriculture Tax Law: The Sindh Agriculture Income Tax Bill 2025, now law, imposes taxes of 20-28% on listed agricultural companies and a super tax on incomes above Rs 1.5 billion, with agricultural income now taxable across Pakistan after Sindh and Balochistan followed Punjab and KP. The law includes up to 45% tax on incomes over Rs 5.6 million, a super tax for incomes exceeding Rs 150 million, and a 20-29% tax on corporate farming, while income below Rs 600,000 remains exempt. [BR] [Dawn] [ET] [The News]

ENERGY - WEATHER, WATER & POWER

• PIA Privatization Attempt Resumes: The Privatisation Commission is prepared for a second attempt at privatizing PIA, with several returning bidders after last year’s failure. In October 2024, the only bidder, Blue World City consortium, had offered just Rs 10 billion for a 60% stake, far below the Rs 85.03 billion expectation. [ET]
• Cement Dispatches Rise 14%: Pakistan’s cement sector saw a rebound in January 2025, with domestic dispatches rising 11.64% YoY to 3.313 million tonnes and exports surging 30.25% to 581,691 tonnes. Total dispatches grew 14.08% to 3.894 million tonnes, with both North and South-based mills reporting strong gains in local and export markets. [Dawn] [ET] [The News]
• Govt Seeks EV Tariff Cut: The federal government has requested Nepra to cut the EV charging station tariff by Rs 23.57/unit and remove the Rs 24.44/unit margin cap. This move aims to boost EV infrastructure development by making charging more affordable and encouraging investment. [The News]
• Pakistan-Middle East Trade Deficit Rises 5.14%: Pakistan's trade deficit with the Middle East rose 5.14% to $6.558 billion in H1 FY25 due to higher petroleum imports. Exports grew 6.04% to $1.597 billion. Despite a 35.23% rise in exports in FY24, the growing oil import bill remains a concern. [Dawn]
• Senate Committee Discusses Iran Barter Trade Challenges: The Senate Standing Committee on Trade discussed the challenges of the barter trade system with Iran, with trade representatives raising concerns. Around 600 trucks were stuck at the Pakistan-Iran border due to import order demands. Food items were being exported from Pakistan to Iran under the barter system. Commerce Secretary Jawad Pal mentioned that the State Bank had made the electronic import form (EIF) mandatory. [ET]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Aurangzeb Confident on IMF Benchmarks: Finance Minister Muhammad Aurangzeb expressed confidence in meeting IMF structural benchmarks, citing the National Fiscal Pact and progress on agricultural income tax legislation. He remains optimistic about the upcoming six-month IMF review, expecting a positive outcome. [BR]
• Zardari’s China Visit Begins: President Asif Ali Zardari will visit China from February 4-8, marking his first official visit since taking office in March 2024, at the invitation of President Xi Jinping. The visit will focus on enhancing economic, trade, and security cooperation, particularly regarding CPEC and future connectivity projects, and will include meetings with Chinese leadership. [The News]
• Justice Kayani Removed from IHC Committees: Justice Mohsin Akhtar Kayani was removed from top IHC committees after opposition to Justice Sarfraz Dogar’s transfer. The committees were restructured, with Chief Justice Aamer Farooq staying as chairman and Justice Dogar joining the Administrative Committee. The Departmental Promotion Committee now includes Justice Dogar and Justice Azam Khan. [Dawn]
• Pakistan, Saudi Arabia Sign $1.61 Billion Deals: Pakistan and Saudi Arabia signed two agreements worth $1.61 billion, including a $1.20 billion deferred payment arrangement for oil imports and a $41 million concessional loan for a water project in Mansehra. The agreements, signed by Dr. Kazim Niaz and Sultan Abdulrahman Al-Marshad, were welcomed by Prime Minister Shehbaz Sharif, strengthening bilateral economic relations. [BR] [Dawn] [ET] [ET]
• PRA Reports Record Sales Tax Collection: The Punjab Revenue Authority (PRA) reported a record sales tax collection of Rs 22.21 billion in January 2025, up 21% from Rs 18.39 billion in January 2024. The total tax revenue for the current fiscal year reached Rs 142 billion, a 12% increase from the previous year. Breakdown shows a 10% growth in sales tax, a 30% rise in the Punjab Infrastructure Development Cess, and a 46% increase in the Punjab Workers Welfare Fund. [ET]
• Govt to Borrow Rs 6.825 Trillion: The government plans to borrow Rs 6.825 trillion through Treasury bills and bonds between February and April to meet budgetary needs, with Rs 3.925 trillion raised from Pakistan Investment Bonds and Rs 2.9 trillion from Market Treasury Bills. Despite a 26% increase in FBR revenue during H1FY25, the tax shortfall has widened, and a significant boost in tax revenue growth is needed to meet the annual target. [ET] [The News]
• Pakistan Trade Deficit Hits $2.3 Billion: Pakistan's trade deficit in January 2025 was $2.3 billion, driven by $5.24 billion in imports, a 10% increase from last year. Exports grew to nearly $3 billion but were insufficient to cover the gap. Despite informal import restrictions, the government managed to control the current account deficit with reduced imports and increased non-debt inflows. [ET]
• PSX Declines Amid Security, Political Uncertainty: The Pakistan Stock Exchange (PSX) continued its decline for the third session, with the KSE 100 index falling below 113,000 points due to rising security concerns and political uncertainty. The market mirrored global trends, reacting negatively to US President Trump’s tariffs on Mexico, Canada, and China. The index dropped by 1,574 points, hitting a low of 112,745 points, down 1.32% from the previous day. [Dawn]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israeli Genocide: Israeli Prime Minister Benjamin Netanyahu visited Washington on Monday for talks with the Trump administration regarding a second phase of the Gaza ceasefire. Netanyahu plans to discuss victory over Hamas, countering Iran, and freeing prisoners in his meeting with President Trump on Tuesday, which will be Trump’s first foreign leader meeting since returning to the White House. Hamas officials indicated readiness to negotiate the details of the second phase of the ceasefire. [Dawn]
• USAID Website Offline Amid Merger Reports: The USAID website remained offline on Monday, two days after reports surfaced about its potential merger with the US State Department. Elon Musk, overseeing major government reforms, confirmed that President Trump authorized the dismantling of USAID, established in 1961 to manage US foreign aid. Musk criticized the agency, calling it a "criminal organization" and stated they were working to shut it down. [Dawn]
• Russia Eyes Saudi, UAE for Trump-Putin Summit: Russia is considering Saudi Arabia and the UAE as potential venues for a summit between US President Trump and Russian President Putin. Trump has shown willingness to meet Putin to discuss Ukraine and energy, though direct communications about a call are unconfirmed. Meanwhile, the US-Canada-Mexico trade war could lead to higher prices on items like automobiles, steel, aluminum, agricultural products, electronics, and machinery due to rising tariffs and disrupted supply chains. [Dawn] [Dawn]
• Stock Markets Fall on Trade War Fears: Stock markets dropped on Monday due to concerns over trade wars after Trump threatened tariffs on Canada, China, and Mexico. European automakers like Volkswagen and Stellantis were hit hard. Trump’s warning on possible tariffs on the EU and Britain further fueled fears, with Asian markets also closing mostly lower. Investors are concerned about the global economic impact of the trade conflict. [Dawn]
• Russian Wheat Prices Rise Amid Lower Exports: Russian wheat export prices rose last week, reaching 2023/24 levels for the first time this season, but market liquidity is rapidly decreasing. Analysts predict February exports will halve compared to last year, matching January volumes. Russian wheat prices with 12.5% protein rose to $239 per metric ton for February delivery and $243 for March delivery. However, liquidity is shrinking as there are fewer buyers and sellers in the market. [BR]
• OPEC+ to Raise Oil Output: OPEC+ confirmed plans to gradually raise oil output starting in April, reversing 2.2 million bpd of cuts over 18 months, at 120,000 bpd per month. This follows US President Trump's call for lower prices. Meanwhile, Malaysian palm oil futures gained 1.96%, closing at 4,373 ringgit ($978.30), supported by stronger soy oil and crude oil prices. [BR] [BR]

OPINION(S) & REMAINDERS

• Opinion: 2024 Cotton Shortfall - “By purchasing cotton at the support price, TCP would not only guarantee fair compensation for farmers but also contribute to an increase in cotton production. This would restore farmer confidence and shield them from the adverse effects of market fluctuations. At the national level, such a system would breathe new life into Pakistan’s cotton industry, providing much-needed stability and growth.” - By Sajid Mahmood [BR]
• Opinion: Safeguarding Wetlands for a Healthier Planet - “Wetlands are precious ecosystems with life, service, and value for society. They make our existence on Earth possible. Highly interconnected and biodiverse, wetlands link mountains to oceans, span national borders, connect different habitats, and facilitate the movement of species.” - By Nasir Ai Panhwar [Dawn]