ABAD chief warns 12% policy rate could hurt construction and jobs
ABAD Chairman Muhammad Hanif Gohar has urged the SBP to lower interest rates, warning that higher borrowing costs could affect construction investment, housing affordability and jobs.
The Association of Builders and Developers of Pakistan (ABAD) has urged the State Bank of Pakistan (SBP) to reverse its latest interest rate increase, warning that higher borrowing costs could put further pressure on construction activity, housing affordability and employment.
ABAD Chairman Muhammad Hanif Gohar expressed concern over the central bank’s decision to raise the policy rate by 0.5 percentage points to 12%, effective October 27, saying the move would create additional difficulties for the construction industry.
He called for a significant reduction in interest rates to support economic activity and investment.
Gohar said higher borrowing costs could increase financing expenses for construction projects, potentially discouraging investment and making it more difficult for developers to launch new developments.
He also warned that construction costs could rise further, noting that steel bar prices had already increased. Further increases in cement, steel bars and other building materials would add to the financial pressure on developers and people seeking to build homes, he said.
Pakistan faces an estimated shortage of 10 million housing units, according to the SBP, making housing affordability a significant challenge for the country.
Gohar said higher interest rates could also affect more than 100 industries linked to construction, including businesses involved in building materials and related services. A slowdown in construction activity, he warned, could affect labourers, skilled workers, contractors and suppliers.
He cautioned that weaker activity in the sector could contribute to job losses and deepen economic difficulties for households.
The ABAD chairman stressed that construction plays an important role in economic activity and employment, urging policymakers to consider the sector’s wider economic links when making monetary and economic policy decisions.
He called on the authorities to address the challenges facing the industry and take steps to support construction activity and protect employment opportunities.
