KARACHI: Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum, has voiced concerns over the disparity between the thriving stock market and troubling economic indicators. The Pakistan Stock Exchange recently surpassed a historic milestone, with the KSE-100 index climbing to 182,408 points, thanks in part to institutional buying and anticipation of a potential interest rate cut. However, Hussain highlighted that this financial optimism is overshadowed by a significant trade deficit and challenges in the textile sector.

Speaking to the business community, Hussain noted that the stock market’s impressive gains reflect investor confidence, bolstered by stabilized inflation at 5.6 percent. This environment supports the possibility of a two percent reduction in borrowing costs, which would benefit the industrial sector. Despite these positive financial trends, he warned that the external sector is facing severe challenges.

Hussain pointed out that the trade deficit has widened by 34 percent in the first half of the current fiscal year, reaching $19.2 billion. This trend could exert pressure on the rupee if not addressed promptly. He also expressed concern over a 20 percent decline in merchandise exports in December, underscoring structural issues within the manufacturing sector. Although the Manufacturing PMI rose to a 10-month high, he argued that this has not translated into sustained export growth, indicating a critical policy shortfall.

The textile sector, a cornerstone of the national economy, is facing an "emergency-like" situation, according to Hussain. While textile exports reached $17.85 billion in 2025, this masks a decline in volume due to higher global prices. The textile industry is grappling with high operational costs and a cotton shortage, with production falling to around 5 million bales. Hussain urged the Ministry of Commerce to adopt a robust diplomatic and trade strategy to diversify export markets, highlighting competition from Vietnam and China.

Hussain also commented on the government's proposed tariff reform plan, which aims to simplify import duties. He supported the reduction of duties on 2,700 raw material lines, which could lower production costs and enhance competitiveness. However, he cautioned that care must be taken to ensure domestic industries aren't adversely affected by cheaper imports. He concluded that a balanced economic strategy is needed, where stock market successes are supported by tangible growth in exports and industrial output.