KARACHI: Mian Zahid Hussain, a prominent figure in Pakistan's business community, highlighted a tentative recovery in the national economy, attributed to a resurgence in Large-Scale Manufacturing (LSM) and strong remittance inflows. As the President of the Pakistan Businessmen and Intellectuals Forum and other key associations, Hussain emphasized the importance of these developments during a recent address to business leaders.

The latest data shows the HBL Pakistan Manufacturing PMI reached 52.8 in December, marking a 10-month high. This uptick is coupled with growth in new export orders, suggesting Pakistani industries are regaining their footing in international markets despite high regional energy costs. Hussain credited this progress to the efforts of local manufacturers and the resilience of overseas Pakistanis, whose remittances continue to play a crucial role in stabilizing the economy.

Remittances recorded an inflow of $3.6 billion in December, bringing the six-month total for FY26 to over $19.73 billion. These funds have been vital in stabilizing the Pakistani rupee and maintaining foreign exchange reserves, providing the government with the leverage to enact significant policy changes.

However, Hussain warned of potential risks to this economic stability. He called for immediate government intervention to address the liquidity crisis facing exporters by implementing a 1 percent fixed final tax regime. The current complex tax system, exacerbated by the removal of "zero-rating" on local supplies, has stalled billions of rupees in refunds, creating cash flow challenges for businesses.

Hussain argued that a simplified tax structure would ease compliance burdens and help exporters secure long-term orders. He also noted ongoing difficulties in the textile sector, which is struggling with a cotton shortage and high input costs. He urged the government to view the proposed tax reform as a strategic move to ensure export sustainability.

With LSM showing signs of recovery and remittances providing financial stability, Hussain sees a unique opportunity for the government to enact these changes and steer the country toward a sustainable, export-driven economic future.