Karachi: Higher interest rates and inflation forced auto loans to decline for the 16th consecutive month in October، The News reported Friday citing State Bank of Pakistan (SBP) data.
According to the central bank, auto loans fell by 23.5 per cent year on year to Rs 264 billion in October and Rs 272 billion in September 3 per month.
Auto loans reached a record high of Rs 368 billion in June 2022, but have since fallen by Rs 104 billion, or 28، Because the SBP has tightened monetary policy to curb inflation and external imbalances.
Analysts say SBP’s actions، Along with higher interest rates, the sharp depreciation of the rupee against the dollar has led to higher car financing and higher car prices, Make them unbearable for many users. Rapid rise in inflation has also had a negative impact on consumer purchasing power.
“The auto sector has suffered severely due to high interest rates and devaluation of the currency,” said one analyst، Due to which car financing has become very expensive and car prices have become very high.
Some carmakers have recently lowered their prices، But demand has not increased as expected as consumers are still struggling with high inflation and low disposable income.
According to the Pakistan Automotive Manufacturers Association (PAMA), car sales in the country fell 44% to 27,163 units in the first four months of the current financial year, Which began in July.
SBP has increased its policy rate by 15 percentage points overall since September 2021 to 22%, which is one of the highest rates in the world. The SBP is expected to begin easing its monetary policy in the first half of 2024، Because inflationary pressures are expected to ease and foreign inflows are expected to improve the country’s external position.
According to SBP data, bank lending to the private sector fell 0.8 percent to Rs 8.10 trillion in October. Consumer debt also fell 8% to Rs 829 billion in October، Personal loans fell 4% to Rs 246 billion and housing loans fell 2.7% to Rs 207 billion
Analysts say the private sector is likely to receive credit in the coming months, as interest rates are expected to fall, with financial stability expected to reduce congestion, And foreign inflows are expected to reduce liquidity barriers.