Economics
Surge in Bad Loans Poses New Risks to Pakistan Economy’s Revival
Pakistani labourers load sacks of grains on a truck at the main wholesale market in Karachi.
Photographer: Asif Hassan/AFP via Getty Images
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A quick economic revival may elude Pakistan’s economy as soured debt at the nation’s banks increases at the fastest pace in eight years, constraining their ability to boost lending.
Total bad debt rose by 23% in the year to June 30, while annual growth in loans slumped to a four-year low, data compiled by Pakistan’s central bank shows. Deterioration in the asset quality may continue as companies across the board -- from Toyota’s local unit to Power Cement Ltd. -- cut production while others, including Nestle SA’s Pakistan unit, shrink their workforce.