Industry Warns SBP Rate Hike Will Damage Exports and Growth

Leading industry and business associations have issued a sharp warning that the State Bank of Pakistan's decision to raise the policy rate will inflict serious damage on export competitiveness and broader economic growth. The business community's rejection of the hike was swift and unequivocal, with multiple chambers and trade bodies issuing statements condemning the move.

Industry leaders argued that higher borrowing costs would squeeze manufacturers already operating under the pressure of elevated energy prices and a challenging global trade environment. Exporters, in particular, warned that tighter credit conditions could force production cutbacks and erode Pakistan's hard-won gains in international markets.

The rate increase has drawn criticism across the manufacturing, textile, and industrial sectors, which collectively account for a significant share of Pakistan's export earnings. Business associations called on the central bank to reconsider its stance and prioritise economic growth over inflation containment at a time when industry remains fragile.

The State Bank has defended its monetary policy stance as necessary to anchor inflation expectations and maintain macroeconomic stability. The divergence between the central bank's priorities and industry demands reflects the difficult trade-offs Pakistan's policymakers face as the economy attempts a gradual recovery.