Recent data from the Pakistan Telecommunication Authority (PTA) reveals a significant decline in local mobile phone manufacturing in Pakistan for July 2024. The number of mobile phones manufactured and assembled fell to 1.61 million units, marking a 20% decrease year-on-year (YoY) and a substantial 62% drop compared to the previous month.

This sharp decline is primarily attributed to a surge in pre-buying activities in June 2024. Following the announcement of an 18% General Sales Tax (GST) on mobile phones in the FY2025 budget, consumers rushed to purchase mobile phones before the tax took effect. This rush led to a temporary spike in sales, prompting manufacturers to ramp up production in June to meet the heightened demand. Consequently, production and sales saw a significant drop in July as the market adjusted to the new tax environment.

Resilient Demand Despite July Dip

Despite the decline in July, the combined average monthly sales for June and July 2024 were 2.9 million units, surpassing the average of 2.6 million units recorded during the first five months of 2024 (January to May). This suggests that while July experienced a dip, overall market demand for mobile phones remained strong, indicating resilience in consumer purchasing behavior.

Growth in Local Manufacturing Despite Short-Term Fluctuations

Over the first seven months of 2024, the total number of locally manufactured and assembled mobile phones reached 18.95 million units, more than double the production from the same period last year. This impressive growth can be attributed to the import restrictions imposed in the previous year, which spurred local manufacturing by reducing dependence on imports. As a result, the local industry has expanded, meeting a larger share of domestic demand.

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When compared to the same period in 2022, there is a 27% year-on-year increase in local mobile phone manufacturing. Several factors have contributed to this growth, including gradual economic recovery, a higher share of local production driven by increased taxes on imported phones, and the continued expansion of Pakistan’s population. With more consumers entering the market, the demand for mobile phones remains robust, providing local manufacturers with opportunities to expand operations and contribute to the country’s economic growth.