Inflation Hits 6.5-Year Low, Pakistan Gold Prices Drop, World Bank Funds Dams, Pakistan/Saudi Strengthen Ties, Trade Deficit Shrinks, Arms Sales hit $

TOPLINE

• Pakistan's CPI-based inflation dropped to 4.9% in November 2024, a 6.5-year low from 7.2% in October 2024 and 29.2% in November 2023. The Finance Ministry noted the average 7.88% inflation for FY2025's first five months, may reduce borrowing costs, improve fiscal balance, and increase savings on debt servicing.
• Gold prices in Pakistan dropped by Rs 1,700/tola on Monday, following a $17 decrease in international gold prices, with 24-carat gold now priced at Rs 274,500/tola. Silver prices remained stable, with/tola silver priced at Rs 3,400 and 10-gram silver at Rs 2,914.95.
• The World Bank has helped Sindh build 70 small dams in drought-prone areas. A WB mission visiting the Mole-5 dam in Jamshoro noted positive changes, with water levels in Kohistan rising from 450 feet to 150 feet, boosting agriculture and local economies.
• Pakistan and Saudi Arabia signed 34 MOUs on Monday, with 7 already formalized into agreements worth $560 million. Prime Minister Shehbaz Sharif expressed satisfaction with the growing cooperation and investment projects between the two countries, emphasizing Saudi Arabia's role as a reliable partner in Pakistan's challenging times.
• Pakistan's exports rose by 12.57% to $13.691 billion in July-November FY2025, while imports increased by 3.90% to $22.342 billion, narrowing the trade deficit by 7.39% to $8.651 billion. In November 2024, the trade deficit shrank by 18.60% YoY to $1.589 billion, reflecting improved export performance and moderated import growth.
• Sales by the world's 100 largest arms companies reached $632 billion in 2023, a 4.2% increase, driven by conflicts in Ukraine and Gaza, as well as tensions in Asia. This marked the first time all 100 companies exceeded $1 billion in sales, with Russian and Middle Eastern manufacturers seeing significant growth.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS (9)

• Kinnow Export Target Reduced by 16%: Exporters have set Pakistan's Kinnow export target at 250,000 tons for this year, a 16% decrease from last year, due to climate change and the aging variety of the fruit. Waheed Ahmed, Patron-in-Chief of the All Pakistan Fruit and Vegetable Exporters Association, noted that production is expected to drop by 35% and the variety, 60 years old, is struggling to withstand climate effects and diseases. [BR] [Dawn] [ET]
• KCCI Urges Removal of Tea Price Hike: KCCI President Muhammad Jawed Bilwani has urged the government to withdraw the Rs 1,200/kg Minimum Retail Price on black tea imports. He argued the regulation penalizes legitimate importers with higher taxes and makes tea unaffordable for low-income groups, as it doesn't account for varying import costs. [ET]
• Punjab Targets 16.5 Million Acres for Wheat: Punjab has set a target of cultivating wheat on 16.5 million acres this season. To encourage farmers, the government announced incentives, including 1,000 tractors and 1,000 laser land levelers through transparent balloting. The Rawalpindi division has already exceeded its target of 1.491 million acres, reaching over 1.503 million acres. [Dawn]
• Cotton Imports Impact Local Prices in Pakistan: Record imports of cotton and yarn have caused a drop in local cotton prices, worrying farmers and ginners. Due to an 18% sales tax on locally produced cotton, textile mills have imported 66,000 metric tonnes of yarn between July and October 2024, and Pakistan is expected to import over 6 million bales of cotton this year. [ET]
• Cotton Prices in Pakistan by Region: Cotton prices in Pakistan are as follows: In Sindh, cotton is Rs 16,000-17,500/maund, Phutti is Rs 6,500-8,200/40 kg. In Punjab, cotton is Rs 16,700-17,600/maund, Phutti is Rs 7,000-8,300/40 kg. In Balochistan, cotton is Rs 16,500-19,000/maund, Phutti is Rs 7,400-9,400/40 kg. Balochi cotton is Rs 18,500-18,800/maund, and Primark cotton is Rs 19,000-19,900/maund. [BR]
• Pakistan Inflation Hits 6.5-Year Low: Pakistan's CPI-based inflation dropped to 4.9% in November 2024, marking a 6.5-year low compared to 7.2% in October 2024 and 29.2% in November 2023, as per the Pakistan Bureau of Statistics. The Finance Ministry highlighted that this inflation deceleration, with an average of 7.88% for FY2025's first five months, could lead to lower borrowing costs, improved fiscal balance, and increased savings on debt servicing. [BR] [Dawn] [ET]
• Provinces Miss Agriculture Tax Deadline: The federal government acknowledged that provincial governments missed the deadline to amend their agriculture income tax legislation by October 2024. The Ministry of Finance informed the National Assembly Standing Committee that provinces were required to align their tax regimes with federal personal and corporate income tax laws to start taxation by January 1, 2025. [BR]
• Gold Prices Drop in Pakistan: Gold prices in Pakistan dropped by Rs 1,700/tola on Monday, following a $17 decrease in international gold prices, with 24-carat gold now priced at Rs 274,500/tola. Silver prices remained stable, with/tola silver priced at Rs 3,400 and 10-gram silver at Rs 2,914.95. [ET]

ENERGY - WEATHER, WATER & POWER

• Lahore Faces Severe Air Pollution: Lahore remains heavily polluted despite Punjab government's efforts. Once known as the "city of gardens," it is now the most polluted city globally. The AQI reached 307 between 8-9 am, with an overall level of 277. Specific areas like DHA Phase-5, near the US Consulate, and Gulberg recorded AQI levels of 459, 433, and 416, respectively. [Dawn]
• World Bank Supports 70 Dams in Sindh: The World Bank has helped Sindh build 70 small dams in drought-prone areas. A WB mission visiting the Mole-5 dam in Jamshoro noted positive changes, with water levels in Kohistan rising from 450 feet to 150 feet, boosting agriculture and local economies. [Dawn]
• Thar Coal Powers Pakistan’s Cost Savings: Sindh Chief Minister Syed Murad Ali Shah emphasized that Thar Coal is the most affordable electricity source in Pakistan, but transmission constraints hinder its full potential. Since 2019, 27,000 GWh of electricity has been generated from Thar Coal Block-II at Rs 4.8/kWh, saving around $1.3 billion in foreign exchange compared to the higher cost of imported coal. [BR] [Dawn] [ET]
• Pakistan Mulls Legal Action Over Neelum-Jhelum Faults: Pakistan is considering suing consultants of the Rs 500 billion Neelum-Jhelum Hydropower Project due to recurring faults. Prime Minister Shehbaz Sharif will decide after consultations, while a committee investigates cracks in the head race tunnel. The consultants include MWH USA, NORPLAN, NESPAK, ACE, and NDC, with CGGC and CMEC as contractors. [Dawn] [ET]
• Sindh Minister Decries Illegal Canals Project Work: Sindh Irrigation Minister Jam Khan Shoro stated that if work on the disputed canals project started without approval from CDWP and ECNEC, it is illegal. He also mentioned that the PPP chairman opposed the project in ECNEC and raised concerns with the federal government. Shoro made these remarks after inaugurating the 19th degree show at Shaheed Allah Buksh University in Jamshoro. [Dawn]
• Experts Urge Action on Water Stewardship: Experts at a workshop in the city on Monday highlighted the urgent need for effective water stewardship. The event, "Strengthening City-Wide Partnership to Promote Collective Action for Water Stewardship" (SCWP), emphasized collaboration among stakeholders from the private sector, government, civil society, academia, and religious schools to address the city's water challenges. [Dawn] [ET]
• SC Allows Intervention in IPP Agreements: The Constitutional Bench of the Supreme Court, headed by Justice Aminuddin, ruled that it can intervene in cases related to agreements with independent power producers due to public interest. The bench issued notices to the Attorney General for Pakistan after removing objections raised by the SC Registrar’s Office. [BR]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• PTI Condemns Force Against Protesters: The federal cabinet approved a joint task force to investigate the spread of fake news about the deaths of protesters during the government crackdown on PTI demonstrations at D-Chowk. PTI claimed that at least 12 supporters were killed by law enforcement, a figure confirmed by PTI Chairman Barrister Ali Gohar. [BR] [Dawn] [Dawn]
• Shehbaz Attends One Water Summit: Prime Minister Shehbaz Sharif is visiting Riyadh, Saudi Arabia, on December 3-4, 2024, to attend the "One Water Summit," a global initiative by Saudi Arabia, France, Kazakhstan, and the World Bank. The summit focuses on fostering international collaboration and political commitments for sustainable water resource management. [BR] [Dawn]
• Pakistan, Saudi Arabia Strengthen Ties: Pakistan and Saudi Arabia signed 34 memorandums of understanding (MOUs) on Monday, with 7 already formalized into agreements worth $560 million. Prime Minister Shehbaz Sharif expressed satisfaction with the growing cooperation and investment projects between the two countries, emphasizing Saudi Arabia's role as a reliable partner in Pakistan's challenging times. [MG]
• Trade Deficit Shrinks Amid Export Growth: Pakistan's exports rose by 12.57% to $13.691 billion in July-November FY2025, while imports increased by 3.90% to $22.342 billion, narrowing the trade deficit by 7.39% to $8.651 billion. In November 2024, the trade deficit shrank by 18.60% YoY to $1.589 billion, reflecting improved export performance and moderated import growth. [BR] [Dawn]
• Banking Deposits, Advances Grow: Banking sector deposits reached Rs 31.1 trillion in October, marking a 17.9% year-on-year increase, although they declined by 0.7% month-on-month. Bank advances totaled Rs 13.8 trillion, up 15.8% YoY and 12% MoM, while investments rose 24.6% YoY to Rs 28.9 trillion but fell 5.7% MoM. [The News]
• FBR Plans Steel Import Restrictions: The FBR is working on a policy to limit raw material imports for steel production in FATA/PATA to local consumption, requiring a consumption certificate and upfront payment. This follows a letter from M/s Century Steel Mills to Prime Minister Shehbaz Sharif, leading to the formation of a high-level committee. [BR]
• World Bank Flags NTDC Contract Issues: The World Bank raised concerns with the Pakistani government over NTDC's implementation of project works without valid contracts, noting that 80% of contracts had expired, some up to 24 months ago, with no extensions despite ongoing work. [BR]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israeli Genocide: Israel conducted air strikes in Lebanon on Monday in response to an attack claimed by Hezbollah, marking the first breach of the recent ceasefire. The truce, which came into effect last Wednesday to end the war, has largely halted fighting but both Israel and Hezbollah were accused of violating the agreement. The ceasefire was meant to stop the conflict that has resulted in thousands of deaths and mass displacements on both sides of the border. [BR] [Dawn] [ET] [ET]
• Airstrikes Kill 25 in Idlib, Militias Enter Syria: At least 25 people were killed in airstrikes by Syrian and Russian jets on the rebel-held city of Idlib, targeting a crowded residential area. The attack came as President Bashar al-Assad vowed to defeat insurgents and the Syrian army recaptured towns. Meanwhile, hundreds of Iran-backed Iraqi militia fighters crossed into Syria to aid the government, with Tehran pledging support. [BR] [BR] [Dawn]
• Arms Sales Surge to $632 Billion: Sales by the world's 100 largest arms companies reached $632 billion in 2023, a 4.2% increase, driven by conflicts in Ukraine and Gaza, as well as tensions in Asia. This marked the first time all 100 companies exceeded $1 billion in sales, with Russian and Middle Eastern manufacturers seeing significant growth. [BR]
• Stampede Kills 56 at Guinea Football Match: A stampede at a football match in Guinea's second city, N’Zerekore, killed at least 56 people. The incident occurred after fans stormed the pitch following a player being sent off and a penalty awarded to the opposing team. Initially reported as fan clashes, the opposition blamed the military-led authorities for the tragedy. [BR] [Dawn]
• Volkswagen Workers Strike Over Layoffs: Thousands of Volkswagen workers went on strike across Germany, protesting management's plans for mass layoffs and factory closures amid the company's financial struggles. The strike, led by the IG Metall Union, comes as VW faces high manufacturing costs, challenges in transitioning to electric vehicles, and intense competition in China. [BR] [Dawn] [ET]
• Biden Pardons Son Hunter Amid Legal Scrutiny: US President Joe Biden pardoned his son, Hunter, who was facing sentencing for two criminal cases. Biden argued that Hunter was unfairly targeted because of his relationship to the president. The move is expected to raise concerns about the US judicial system's independence, especially as Donald Trump has appointed loyalists to key positions in the FBI and Justice Department. [BR] [Dawn] [ET]
• UN Talks on Land Restoration Begin: UN talks on land degradation and desertification began in Saudi Arabia, with UN Secretary-General Antonio Guterres calling it a "moonshot moment." The UNCCD will focus on land protection, restoration, and drought response over 12 days. The goal to restore one billion hectares by 2030 has been increased to 1.5 billion hectares to address growing climate-related crises like escalating droughts. [Dawn]

OPINION(S) & REMAINDERS

• Govt Plans Revisions to PECA 2016: The government is planning major revisions to the Prevention of Electronic Crimes Act (PECA), 2016, including the creation of a Digital Rights Protection Authority (DRPA). The proposed amendments would give the DRPA powers to block online content, prosecute those spreading fake news, and take action against social media platforms hosting prohibited content. [Dawn]
• Opinion: Falling Farm Income Reverberates Across Wider Economy - “A healthy agricultural economy is not just a rural concern; it is, in fact, a national imperative. By addressing the underlying inefficiencies and creating a supportive environment for farmers, the government can revive the rural economy and restore demand across sectors. It must take the required steps, the sooner the better.” - By Ali Khizar [BR]

• Opinion: Islamic Climate Finance a Sustainable Solution - “Islamic finance, known for its global reach and its focus on supporting the real economy and sustainable initiatives, presents a distinctive approach to climate finance by aligning ethical investment principles with sustainable development goals. According to the Islamic Finance Development Report 2024 issued by the London Stock Exchange Group, more than 1,981 institutions now offer Islamic financial services, managing assets worth $4.9 trillion, with a presence spanning 120 countries. Islamic climate finance is gaining recognition as an effective tool in the global effort to address and adapt to the challenges of climate change.” - By Ahmed Ali Siddiqui [Dawn]
• Opinion: Falling Industrial Production - “The fall is disappointing because the Annual Plan of the Planning Commission has envisaged a 3.5% growth rate in the large-scale manufacturing sector in 2024-25. The expectation is that the sector will get a boost from improved inputs and energy supplies, on the back of anticipated fall in global oil and commodity prices, further easing of import restrictions, higher public sector expenditure, stability in the exchange rate and decline in interest rates.” - By Dr Hafiz A Pasha [BR]