Pakistan Experiencing Strong Growth in Energy Consumption

[Riaz Haq]

Pakistan's energy consumption grew by 5.7% in 2015, faster than the 5.2% increase in neighboring India that claims significantly faster GDP growth. Primary energy consumption growth in a country is often seen as a strong indicator of its GDP growth. Ever since the advent of the industrial age, energy has become increasingly important as a driver of farms, factories, communication, transportation, construction, retail and other sectors of the economy.   In addition to energy, other important economic indicators include cement and steel consumption, auto sales and air travel which are also growing significantly faster in Pakistan than in India.

Pakistan Primary Energy Consumption Trend (Source: British Petroleum)

Primary Energy Consumption:

According to British Petroleum Statistical Review of World Energy released in June 2016,  the primary energy consumption in Pakistan rose to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2 MTOE in 2014 confirming greater economic activity. It was the third fastest growth in energy consumption in Asia. Only the Philippines (9.7%), Vietnam (9.6%) and Bangladesh (8.7%) saw faster growth than Pakistan's.

Domestic Cement Demand:

All-Pakistan Cement Manufacturers’ Association reported cement industry sold 33 million tons in domestic market in fiscal year 2015-16, posting a robust growth of 17.01 per cent compared to the 28.2 million tons sales during the same period in 2015.

Local Auto Production:

Domestic auto production in Pakistan jumped by 21.57 percent (vs 2.58% growth in India) in fiscal 2016 compared to fiscal 2015, according to data from Pakistan Automobile Manufacturers Association. The data collected by Pakistan Bureau of Statistics (PBS) noted that as many as 168,363 jeeps and cars were manufactured during July-May (2015-16) while 138,490 units were produced last year(July-May 2014-15).

Rising Steel Demand:

Pakistan is experiencing 30% growth in steel imports, according to the State Bank of Pakistan. Local steel production is about 6 million tons. In addition, Pakistani imports of steel this year could surpass $2 billion as China-Pakistan Economic Corridor CPEC-related projects ramp up.

Air Travel Growth:

Pakistan air travel market is among the fastest growing in the world.  IATA (International Air Transport Association) forecasts Pakistan domestic air travel will grow at least 9.5% per year, more than 2X faster than the world average annual growth rate of 4.1% over the next 20 years. The Indian and Brazilian domestic markets will grow at 6.9% and 5.4% respectively.

Pakistan saw 23% growth in airline passengers in 2015, according to Anna Aero publication. Several new airports began operations or expanded and each saw double digit growth in passengers. However,  Gwadar Airport growth of 73% was the fastest of all airports in Pakistan.

The top 12 airports all saw large double digit increases. Multan  grew 64%, Quetta 62% and Faisalabad +61% all climbing one place as a result of all of them seeing a growth of over 60%. Turbat Airport in Balochistan is the newest airport to reach the top 12 in terms of traffic.

Mobile Broadband Uptake:

Mobile broadband subscriptions have rocketed from zero to over 30 million in just two years since 3G/4G service rollout in Pakistan. Rapid growth is continuing with over 1 million new subscribers are signing up for 3G and 4G services every month. An equal or larger number of smartphones are are being sold.

Summary:

A whole series of indicators from auto and steel to manufacturing and construction and telecom services are confirming that economic growth is accelerating in Pakistan. Among the reasons for this growth are significantly improved security situation, political stability and soaring Chinese foreign direct investment (FDI) in CPEC related energy and infrastructure projects.  These indicators are attracting investors who have already made Pakistan Stock Exchange the hottest shares market in Asia.  KSE-100, Pakistan's main shares index, is up 18% year-to-date compared to 6% increase in India's BSE-30 index. The challenge for Pakistan is to continue to improve security and political stability to reassure investors of superior returns from their investments in the country.

Related Links:

Haq's Musings

Politcal Stability Returns to Pakistan

Auto and Cement Demand Growth in Pakistan

Pakistan's Red Hot Air Travel Market

China-Pakistan Economic Corridor FDI

Mobile Broadband Subscriptions and Smartphone Sales

Pakistan in MSCI Emerging Market Index

[Riaz Haq]

#Canada Will Set Up 1 GW Of #Solar Power Plants In #Balochistan, #Pakistan #renewableenergy http://cleantechnica.com/2016/07/26/canada-will-set-1-gw-solar-paki... … via @CleanTechnica

Pakistan received a major boost in its endeavor to expand renewable energy infrastructure as Canada agreed to set up large-scale solar power projects in one of the country’s provinces.

According to media reports, the Canadian government recently signed an agreement with the government of Balochistan to set up 1 GW of solar capacity in the province.

The agreement was signed by the Baloch government itself, under special powers received through the Pakistan constitution.

As per the agreement, a Canadian company will set up 20 solar power projects of 50 MW capacity each. The projects are expected to be distributed across the province. A Canadian delegation is expected to visit Pakistan soon to finalize the various project locations.

Pakistan has seen a sharp increase in foreign investment in its renewable energy sector. Led by China, Pakistan’s renewable energy sector has seen increased interest from European governments and companies.

Foreign investors poured $3 billion over the last year into the renewable energy sector in Pakistan, officials from the Alternative Energy Development Board (AEDB) have said. The largely untapped resource potential and a feed-in tariff regime has made renewable energy an attractive investment avenue.

Earlier this year, the AEDB reported that as many as 35 solar PV projects are currently at various stages of development. These projects will have a cumulative installed capacity of 1,111 MW.

[Riaz Haq]

A year ago, carmakers in India were readying to go full throttle, helped by falling fuel prices, easing inflation and softening interest rates. India seemed well on the road to becoming the world's third-largest passenger car market by 2020. 

But the pace of growth has slowed in recent months, with sales increasing at a meagre 6-7 per cent (most carmakers have had far worse depressing sales growth). As if that wasn't worrying enough, a couple of setbacks have further dampened industr .. 

Read more at:
http://economictimes.indiatimes.com/articleshow/53424330.cms?utm_so...

[Riaz Haq]

Dailytimes | #China keen to invest in #Pakistan's steel, energy sectors. #CPEC - http://go.shr.lc/2aBabXm via @Shareaholic

Islamabad: The Chinese investors have showed keen interest in the Pakistan's steel, energy, cement and other sectors for investment and 
joint ventures.

A delegation of Chinese investors representing various companies including Zonergy Company Limited and Hebei Weilang Import and Export Group Co., Limited visited Islamabad Chamber of Commerce and Industry, said a press release issued on Tuesday.

The delegation said China-Pakistan Economic Corridor has generated lot of interest in Chinese investors and purpose of their visit was to study the potential of Pakistani market for investment and business collaboration.

Zonergy Company Limited (ZONERGY) was China's national high-tech enterprise which was providing resource integration services for customers in new energy and energy-saving, environmental protection industries, while it was now looking at Pakistan as a prospective country for investment and JVs.

Hebei Weilang Import and Export Group was a large-scale professional enterprise engaged in manufacturing of bicycles and offering 100 kinds of products in 10 classes including BMXs, frames, forks, BB axles, front and rear axles, brake cables and baskets to clients in Europe, the US, Australia, the Middle East, Africa, Southeast Asia and other areas. The Group was interested to explore Pakistani market for setting up bicycle plant.

While speaking, Acting President ICCI Sheikh Pervez said CPEC was a game changer for Pakistan and stressed that more Chinese investors should come to Pakistan to participate in this flagship project of historic cooperation between the two countries.

He said there was huge potential of investment in many sectors of Pakistan's economy including energy, construction, steel, marble, infrastructure development, mining, oil & gas exploration, engineering, IT and others areas while CPEC was poised to open new horizons of investment opportunities between China and Pakistan. He said China has good expertise and advanced technology while Pakistan offered attractive incentives to foreign investors. He urged that Chinese investors should harvest the investment friendly policies of the current regime by enhancing investment and joint ventures in Pakistan.

[Riaz Haq]

#Pakistan’s #energy sector forging alliances for(university, industry) research and #technology http://go.shr.lc/2aGraLb via @Shareaholic


The launch of US-Pakistan Centre for Advanced Studies in Energy at National University of Sciences and Technology (USPCAS-E) by the United States Agency for International Development (USAID) in collaboration with the Higher Education Commission (HEC) and Arizona State University (ASU) is an effort to fulfill this pressing national need. This partnership builds on existing talent in Pakistan by providing university faculty with exposure to new technology and an opportunity to collaborate with other experts in their fields.

Akif Zia Khan, faculty member at USPCAS-E, NUST, who is specialised in smart grids technology, visited Arizona State University (ASU) this year to attend a series of meetings on curriculum, lab equipment, and applied research projects with peer faculty and fellow researchers at the Power Systems Research Centre (PSERC). His collaborative work with Dr George Karaday of PSERC during his stay at ASU is now playing an instrumental role in developing new curriculum and availability of modern power hardware in the loop smart grids laboratory for Electrical Energy Engineering Programme at USPCAS-E at NUST.

He said the facilities available in smart grids laboratory would help the researchers to model, simulate and validate different domains of electric power grid adding that the power quality analysis and energy auditing can also be performed with the equipment available with this laboratory. The various entities under the umbrella of Pakistan Electric Power Company (PEPCO) as well as industries, which can utilise the available facilities in the laboratory for development and validation of their prototypes, Khan said.

Akif Zia Khan said the opportunity for him to participate in different technical workshops and events hosted by the IEEE Power and Engineering Society chapter at ASU resulted in an extraordinary capacity building of the faculty under this exchange programme and Khan is committed to replicate the same teaching and experimental facilities at NUST campus that he observed at ASU.

Dr Naseem Iqbal, assistant professor at USPCAS-E, NUST, who specialises in fuel cells technology, visited ASU under the same exchange programme. Dr Iqbal worked with a research group at the Polytechnic School, ASU, led by Prof A M Kannan, a renowned expert in fuel cell technology.


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The US-Pakistan Centre for Advanced Studies in Energy initiative is part of USAID's larger US $127 million investment in collaboration with Higher Education Commission (HEC) that will harness applied research to find innovative and practical solution for Pakistan's energy, water, agriculture, and food security challenges.

USPCAS-E is designed to support Pakistan's economic development by strengthening the relevance and responsiveness of universities products, including applied and policy research along with skilled graduates, in accordance with the needs of the public and private sector.

USPCAS-E, in collaboration with academic research, emphasising on practical, solution-based, industry-specific research and development, both for the training and development of students, and for providing support to the Pakistani university.

[Riaz Haq]

In a report titled "From Wealth to Well Being, Boston Consulting Group (BCG) has used SEDA (sustainable economic development assessment) scores to measure how countries have translated GDP growth into their citizens' well-being. 

One particular measure BCG uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75. 

http://www.bcgtelaviv.com/documents/file122227.pdf

A high-profile report prepared by the Boston Consulting Group, US, has suggested that India may have progressed well in the economic indicator (which consists of income, economic stability and employment), and investment (instructure, health and education), but its progress in sustainability (income equality, civil society, governance and environment) remains below world average. 
Rating 162 countries across the world, though without ranking them, the report finds that in the overall economic progress, India's score is 45.6 (on a scale of 100), higher than the world average of 43.2; in progress in investment, the score is 54.6, with the world average being 40.1; but in progress in sustainability, its score is 50.4, below the world average of 54.4 per cent. 
The report, which seeks to analyze data up to 2014-end, finds that, among BRICS countries (Brazil, Russia, India, China and South Africa), in all three indicators of progress -- economics, investment and sustainability -- China performs better than India, at 60.1, 69.1 and 52.3 respectively. 
Brazil performs better in economic progress (52.7) and sustainability (54.7), but in investment it doesn't do so well (46.4). Russia does worse than India in economic and investment progress (43.6 and 39.9 respectively), but better in sustainability (53.1). 
Among India's neighbours Sri Lanka does better than India in economic progress and investment, but it fails to do as well in sustainability (51.2, 53.6 and 49.6 respecively). Pakistan is way behind India in economic progress and investment, yet it is a little ahead in sustainability (37.1 34.4 and 51.3 respectively). 
Nepal may be behind India in economic progress (41.8 per cent), it is way ahead of India two other indicators, investment and sustainability (61.0 and 55.4). And Bangladesh is ahead of India in economic progress (47.7), but it is behind India in investment and sustainability (51.9 and 43.8 respectively).

http://www.counterview.net/2016/07/indias-below-average-progress-in...

[Riaz Haq]

From Express Tribune: 

The brightest spotlight belongs to the two-day Asia Pacific Regulators Roundtable which took place in Islamabad. More than 45 participants from the regulatory and other ICT authorities of over 20 countries took part. These countries represent nearly 50% of the world’s population.

The significance of the event lies in the fact that it was after a long gap of around eight years that such a gathering of ICT luminaries took place in Pakistan. These dignitaries have been avoiding coming to Pakistan, not only due to security reasons, but also because for quite a few years nothing really significant happened in the sector.

The roundtable was inaugurated by no less a person than Houlin Zhao, Secretary General of ITU, the UN body responsible for ICTs in the member states.

He emphasised the incredible potential of ICTs to improve development outcomes in the developing world, in particular through small and medium-size entrepreneurs in the IT sector – something very valid in the Pakistani context.

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In her address to the regional telecom regulators, IT Minister Anusha Rahman gave some upbeat pieces of news, saying Pakistan would soon come up with an effective OTT policy framework and would introduce 5G technology by 2020.

The latter news got a supporting shout from Zong which is reportedly asking for trial of 5G spectrum.

Right after the Asia-Pacific Regulators Roundtable, the three-day ITU-PTA International Training Programme commenced. In this programme, the PTA arranged training of experts from regional countries.

At the inauguration, the ITU secretary general shared that the ITU was looking to sponsor more professional training programmes in Pakistan.

The programme included a session on the ICTs for persons with disabilities, where such persons were actually invited to come on stage and participate so that IT professionals could better understand and try to meet their needs through IT applications. As the training was coming to an end, the ITU secretary general was performing the ground-breaking of the National Incubation Centre. It is funded by the National ICT R&D Fund, which has also risen from a long hibernation of sorts.

The incubation centre will be run by the largest mobile operator of the country, Mobilink, together with its service delivery partner Team Up, which has industry veterans like Zouhair Khaliq and Parvez Abbasi working for it. Further collaboration will be coming from VimpelCom’s ‘Make Your Mark’ programme and Lums Centre for Entrepreneurship.

IT exports

The Pakistan Software Export Board (PSEB) has more good news to share. Not only IT exports have jumped two-fold in the last three years – from $1.4 billion to $2.8 billion – but also the number of companies registered with the PSEB has grown from around 300 to 1,100.

The IT minister claimed that the government is striving to touch the $6 billion IT export mark by 2020.

During this time period, the regulatory approvals for Mobilink-Warid merger also got out of the way.

According to a statement of the CEO of VimpelCom, the owner of Mobilink, the company now plans to invest $1 billion over the next five years which will also create 5,000 jobs in the country. As luck would have it, during the same time period, Telenor, the second largest mobile operator, finally got the 10 MHz spectrum in the 850 band, after winning the latest mobile broadband spectrum auction. There are so many relatively smaller developments that it is difficult to recount all of them. Personally for me, the best news was what the IT minister revealed on PTV.


http://tribune.com.pk/story/1153034/limelight-pakistan-icts-emergin...

[Riaz Haq]

#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT 


"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.

BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.

In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector.

On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.

While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."

[Riaz Haq]

Spotlight: Construction of great corridor catapults #Pakistan into fast track - Xinhua | #China #CPEC http://news.xinhuanet.com/english/2016-08/01/c_135553346.htm …

With an investment of 46 billion U.S. dollars and scores of infrastructure projects, the ongoing construction of the China-Pakistan Economic Corridor (CPEC) is undoubtedly one of the largest endeavors now taking place on the planet.

Roads, energy projects, industrial parks and the Gwadar port are all included in the basket, satisfying Pakistan's immediate needs as well as helping the south Asian country get back on its feet after years of anti-terror campaigns wrecked its economy.

Three years after the initiative on the construction of CPEC was jointly announced by China and Pakistan, Xinhua has learned that the project is yielding its early fruits as new roads and power plants have put Pakistan's growth in the first gear.

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Located 20 km east of Pakistan's largest city of Karachi, the Bin Qasim power plant is one of the pioneer and flagship projects of CPEC planned to begin operating at the end of next year.

For the coal-fired plant built by PowerChina, the Chinese construction company commissioned to undertake the construction of the project, two 660-megawatt generator units will be installed, which would generate 1,320 megawatts of electricity per year, more than a quarter of the 4,500-5,000 megawatts of power shortage estimated for the year 2012.

"With three more plants like this one, Pakistan would have no more energy woes," said Chen Enping, a manager at PowerChina.

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For Sher Afzart, a shop owner in northern Pakistan's Hunza Valley, the Karakorum Highway is what he owes his livelihood to.

The two-lane highway, originally built by the Chinese in the 1970s and recently renovated by China Road and Bridge Corporation, connects Kashgar, a commercial hub in northwest China's Xinjiang Uigur Autonomous Region, and Pakistan.

Afzart can save days on trips to Kashgar to buy goods as the road cuts through the Karakorum mountains. There is a steady flow of business as thousands of Chinese workers labor around Hunza.

Following the completion of the Karakorum Highway renovation project, more business opportunities are created, Afzart said.

"With the convenience of road traffic, I'm thinking of opening branches in Islamabad and even in cities farther south," he said.

The Karakorum Highway is just one of the roads that falls under CPEC. The M-4 National Motorway, a strategic artery in central Pakistan, is also being paved by the Chinese.

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The Gwadar port, located in the southern coast of Pakistan, is where CPEC meets the Indian ocean. From here resources can commence their journey onto the hinterlands of Pakistan and western China, and Chinese and Pakistani products can be shipped out to every corner of the world.

Viewed from above, the port is like an anchor protruding into the emerald waters, forming two natural bays that are as deep as 14.5 m, making them perfect harbors.

After the CPEC cooperation program was launched in 2013, a plan was developed in the following years to comprehensively transform the fishing town into a modern metropolis complete with industrial zones, a harbor and recreational zones.

Gwadar Port Authority Chairman Dostain Jamaldini has big ambitions for the port, eyeing Dubai, which is just across the Arabian Sea, as a model.

Near future plans for the port area include the construction of a Free Trade Zone, a Special Economic Zone, a coastal expressway, an international airport and a pipeline linking Iran, which are all part of the CPEC plan remodelling the town which will be the hinge of the corridor.

"Pakistan is ready to offer the most generous terms for companies investing in the port," Jamaldini said, "We believe the favorable policies and the superb location of the port will soon attract the interest of investors worldwide."

[Riaz Haq]

What lies behind the gates of #Pakistan's growing elite gated communities? #construction #housing #Cement #Steel http://herald.dawn.com/news/1153455 

Inside the gates, the never-ending sectors and undulating roads, the scarce traffic and abundant space can be extremely disorienting. If you are a first-time visitor, you can be forgiven for thinking this expansively designed neighbourhood is Islamabad’s actual twin city, and Rawalpindi just an unplanned appendage.

Driving on Bahria Town’s carpeted tarmac is a fairly docile affair after negotiating the violent potholes and sadistically narrow roads that pervade most of Pakistan. The sculptures of farm animals dotting the roundabouts stay mercifully in place, unlike the free roaming cattle outside. These are merely the fringe benefits of buying an accommodation in what could easily be called Pakistan’s most self-sufficient and luxurious gated community.


There is a riding range for those who have always felt congested city streets do not offer enough galloping room for horses. There is a golf course for those who have never been particularly fond of stirrups and there is a cinema with reclining sofas for those who don’t even like walking. There are health clubs, hospitals, playgrounds and even a cricket stadium in Phase 8, a phase bigger than the first six phases combined. So large, in fact, that it’s possible to take a wrong turn while traversing it and end up in New York somehow. For, beyond an avenue lined with palm trees, there is a Statue of Liberty looking just as confused about being there as you might be about seeing her. There is also an imitation Eiffel Tower on the other end of the same phase. Because, well, why not?----

While Bahria Town has expanded to other cities (the one in Lahore has been functional for a while and construction has started in Karachi and Nawabshah, and is expected to start soon in Hyderabad and Peshawar), the one next to Rawalpindi/Islamabad is still the oldest and most densely populated. It claims to be housing 100,000 people as of now.

Early residents remember it largely being a jungle even 10 years back. The visual trajectory from green to grey has been rapid; one week there would be four-legged creatures running around and the next week four-wheeled vehicles.

Realtors say they primarily deal with business people or retired civil and military officials. The former because they don’t need to hit a nine-to-five job in city centres — which can be a very long commute from Bahria Town; the latter because they get service benefits which they can use or sell to buy a house in this enclave. Selling a service allotment in Islamabad, for instance, will comfortably pay for a house in Bahria Town. Property is cheaper this far away from a city — which is the entire point.

Property dealers also say they run offices abroad; Bahria Town, too, has its corporate offices in the United States, the United Kingdom and the United Arab Emirates. Expatriate Pakistanis who have accumulated a certain amount of wealth, have gotten used to a certain standard of living and now wish to keep a house in their country of origin, are inevitably attracted to Bahria Town’s lavish infrastructure and the uninterrupted supply of electricity.

[Riaz Haq]

Bank credit rises on uptick in #Pakistan economy as interest rates hit 42-year low of 5.25%

http://www.khaleejtimes.com/international/pakistan/bank-credit-rise...


Commercial bank credit and bank investments are on the rise in Pakistan on the back of a significant uptick in the economy.

The new monetary policy and the benchmark discount rate, expected to be announced later this week, are likely to strengthen this trend.

International financial organisations, the ministry of finance and the State Bank of Pakistan (SBP), the central bank, report that the economy is in an expansionary mode and will continue to be so in the next two years.

"We expect gross domestic product [GDP] growth to rise further in fiscal year 2017. The actual GDP growth in fiscal year 2016 was 4.7 per cent - a record high for the last 12 years despite international challenges," say economists.

According to the SBP, the government envisages a higher GDP growth of 5.7 per cent in fy-17. The banking system will gain further strength and earn larger profits as economic growth increases.

The SBP issued a review of the country's macroeconomic performance, with a specific reference to the recent monetary policy which ensured a rapidly declining benchmark discount rate and the lowest interest rate of 5.25 per cent charged by commercial banks, a 42-year low.

Reforms
Finance Minister Ishaq Dar said: "All stakeholders are satisfied with the country's macroeconomic stability, but they should continue the reform process and pursue policies that will enhance and fast-track growth and include all sections of society, business and the economy."

Saeed Ahmed, acting governor of SBP, said: "The monetary performance remained satisfactory during the quarter ended June 2016. Forex reserves reached the highest level of $23 billion." It will expand exports and imports, which, in turn, will benefit banks, the financial, economic and industrial sectors.

All these stakeholders are upbeat on the economy's growth after positive reports from the International Monetary Fund (IMF), the World Bank and Manila-based Asian Development Bank.

The IMF said: "Pakistan's economy is growing at its quickest rate in eight years. Investor confidence has slowly returned to a country that was battered by the global financial crisis."

Bank investments are rising but deposits are not growing that much, reported the SBP. Credit and investments provided by banks rose in the first half of 2016 compared to the like period of 2015, it said. 

"This was despite the fact that deposits saw a fall in growth in the same period. The banks provided additional funds for credit and investment from money they borrowed from SBP."

Liquidity crunch
The central bank injected Rs1.79 trillion on July 11 and Rs1.13 trillion on July 15 into banks to help overcome their liquidity crunch and expand credit to the private sector. One of the key causes of the commercial banks' liquidity crunch was "the borrowing by the government to cover its budgetary gap."

"Banks' deposit growth fell by almost 50 per cent in the first nine months from July to March of the previous fiscal year," the SBP reported.

In a report for the third quarter of fiscal year 2016, the SBP said private sector deposits increased by Rs149.4 billion during July-March, less than half the rise in deposits recorded in the like period of fy-15.

But the plus point is that banks' advances rose at an eight-year high of seven per cent in the first half of 2016 on the back of growing credit demand.

The banking sector advances-to-deposits ratio increased by 51 per cent in June 2016, up from 50 per cent in June 2015. At the same time, the investment-to-deposit ratio increased to 75 per cent in June 2016, up from 64 per cent in June 2015.