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Car financing witnesses decline in Pakistan

In January 2024, automobile financing in Pakistan experienced a downturn, dropping to Rs 246.26 billion, indicating a year-on-year decrease of 25.82 percent and a month-on-month decrease of 1.98 percent.

This contrasts with Rs 331.98 billion in January 2023 and Rs 251.25 billion in December 2023, as per the most recent data provided by the central bank.

It’s noteworthy that this represents the nineteenth consecutive monthly decline in automobile financing, amounting to a total decrease of Rs114.29 billion over the past 19 months.

Several factors contribute to this decrease, including higher interest rates, rising car prices, regulatory constraints on loan acquisition, and increased taxes on automobile imports and components.

According to data from the State Bank of Pakistan (SBP), consumer financing for house building totaled Rs207.62 billion at the end of January 2024, reflecting a 3.44 percent year-on-year decline compared to Rs215 billion in the same month last year. Month-to-month, financing for house building experienced a slight decrease of 0.26 percent compared to the previous month’s Rs208.15 billion.

At the same time, financing for personal use amounted to Rs 243.1 billion, showing a 4.47 percent year-on-year decrease and a 0.54 percent month-on-month decline.

Consequently, overall credit disbursed to consumers recorded a decline, totaling Rs813.96 billion during the review month, with a year-on-year fall of 9.04 percent and a month-on-month decrease of 0.52 percent.

The outstanding credit to the private sector experienced a 0.76 percent year-on-year decrease, amounting to Rs 8.35 trillion in January 2024. On a monthly basis, it declined by 2.21 percent compared to the credit of Rs8.54 trillion in December 2023.

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Within the private sector credit, loans to the manufacturing sector were reported at Rs4.81 trillion during the review period, indicating a slight 0.33 percent year-on-year increase. However, there was a monthly decline of 0.89 percent compared to the Rs 4.85 trillion reported in December.

Borrowing from the construction sector in January 2024 amounted to Rs190.15 billion, reflecting a 0.97 percent year-on-year decrease and a 5.05 percent month-on-month decline compared to the previous month.

Looking forward, data indicates a significant rise in loans to the agriculture, forestry, and fishing sectors, reaching Rs 397.27 billion in the month under review, marking a substantial 16.95 percent year-on-year increase. However, loans to the same sector recorded a sequential decline of 4.82 percent month-on-month.



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